PagSeguro Enters the Market With a Bang

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PagSeguro Digital Ltd. (NYSE: PAGS) entered the market with a bang on Wednesday when it debuted in its initial public offering. Originally its 92.11 million shares were expected to price in the range of $17.50 to $20.50, with an overallotment option for an additional 13.82 million shares. However, shares priced even higher at $21.50, valuing the offering up to $2.28 billion, and shares actually entered the market at $28.20.

The underwriters for the offering are Goldman Sachs, Morgan Stanley, Merrill Lynch, Bradesco BBI, Credit Suisse, Deutsche Bank, Itau BBA and JPMorgan.

This company is a disruptive provider of financial technology solutions focused primarily on micro-merchants and small and medium-sized companies in Brazil. Its end-to-end digital ecosystem enables customers not only to accept payments but also to grow and manage their businesses.

The digital account offers more than 30 cash-in methods and six cash-out options, including a PagSeguro prepaid card, all using its platform and backed by the trusted PagSeguro and UOL brands. The digital ecosystem also features other digital financial services, business management tools and functionalities for clients.

The firm gave some of its metrics in a recent filing:

  • At September 30, 2017, our active merchants totaled 2.5 million, compared with 1.4 million at year-end 2016 and 1.2 million at September 30, 2016. Our active merchants at year-end 2016 represented an increase of 55.6% compared with 0.9 million at year-end 2015. Our active merchants at year-end 2015 represented an increase of 80.0% compared with 0.5 million at year-end 2014.
  • In the first nine months of 2017, our TPV totaled R$24.8 billion, compared with R$9.3 billion in the first nine months of 2016. Our TPV totaled R$14.1 billion in 2016, an increase of 90.8% compared with R$7.4 billion in 2015. Our TPV in 2015 represented an increase of 99.6% compared with R$3.7 billion in 2014. The growth in our TPV from R$4.9 billion in the first nine months of 2015 to R$24.8 billion in the first nine months of 2017 represented an average growth rate of 125.1% for the period.

PagSeguro intends to use the net proceeds from this offering to finance working capital, particularly the early payment of receivables feature that it offers merchants, and to fund future selective acquisitions and investments in businesses, technologies or products that are complementary to its business. Any remaining net proceeds will be used for other general corporate purposes.

Shares of PagSeguro were last seen up about 33% at $28.69, with a range of $28.00 to $29.25 on the day as of 12 p.m. Eastern. Also over 39 million shares had moved on the day thus far.