Business

Credit Suisse agrees to buy up to 35% of the Brazilian digital broker modalmais

Modalmais has nearly 1 million customers, to whom Credit Suisse expects to sell its wealth management services and products

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  • With the deal, ​​the neobank is valued at about BRL 5 billion ($970 million), according to Valor Investe;
  • The two institutions have complementary operations. Credit Suisse is one of the largest wealth managers in the world with excellent investment banking capabilities and modalmais is a neobank in the competitive environment of fintechs in Brazil.

Credit Suisse and the Brazilian digital broker and neobank modalmais signed an agreement establishing that Credit Suisse may acquire preferred shares equivalent to up to 35% of modalmais. With the deal, ​​the neobank is valued at about BRL 5 billion ($970 million), according to Valor Investe.

As Reuters pointed out, digital brokers have grown at a quick pace in Brazil as the country’s benchmark interest rates reached a record low level of 2.25%, forcing many investors to flee from government bonds to equities and sophisticated funds.

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Philipp Wehle, CEO of Credit Suisse’s International Wealth Management division, said, in a press release, that the deal reinforces the company’s strong commitment to Brazilian customers and its ambition to grow in this priority market. “This transaction will enable us to improve the way we serve our customers digitally while gaining access to additional customer segments in an environment with high growth rates”. Credit Suisse did not specify the time frame in which it may reach the 35% stake in modalmais.

Modalmais will continue to be controlled by its founder, Diniz Ferreira Baptista, and by its main executives, including co-CEOs, Cristiano Ayres, and Eduardo Centola.

Modalmais has nearly 1 million customers, to whom Credit Suisse expects to sell its wealth management services and products. It is one of the leaders in number of individuals investing in the stock market, according to data from B3. Currently, modalmais has BRL 10 billion ($1.90 billion) in assets under custody.

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According to Valor Investe, the deal is similar to that made between Itaú Unibanco and XP in 2017. At the time, Itaú agreed to purchase 49.9% of the platform, which at the end of last year listed its shares on Nasdaq. The bank has been diluted and remains a minority shareholder.

The two institutions have complementary operations. Credit Suisse is one of the largest wealth managers in the world with excellent investment banking capabilities and modalmais is a neobank in the competitive environment of fintechs in Brazil.

According to a press release, among the possibilities of the deal are: the distribution of Credit Suisse products, such as structured notes, funds, credit operations, stock offers, among others, to the base of almost 1 million modalmais customers; and Credit Suisse’s access to the latest technology of the modalmais digital platform and to all the functionalities and investment possibilities that a completely digital bank such as modalmais can offer to serve its customers even better.