One takeover done, and another on the horizon?
#067: Meanwhile, big news is coming for Technopoly.
Hola technopolists,
It’s with heavy hearts that we bid Colombia adios from the World Cup as the last LatAm team in the tournament. The paisas reached a turning point in sport as much as in tech.
But to boost your spirits, I have a big announcement to make about Technopoly later this week, so stay tuned.
What’s Hot
🤑 Globant’s on the AI-ttack. The Argentine-born software conglomerate will invest $1bn to build out its AI operations around LatAm, according to CEO Martin Migoya. The move is part of an ambitious regional expansion, which would see the juggernaut add 20k employees to its 27k employee footprint. Migoya seems to be hoping the announcement will perk up Globant’s relatively flat stock price amidst the US tech stock resurgence (Bloomberg Linea)
💸 Arco’s going private. General Atlantic and Dragoneer have agreed to take the edtech platform private in a deal that values Arco at $1.5bn, a ~50% premium over its current market cap. The deal has been in the works for a while, with GA and Dragoneer beginning negotiations last year and going public with their bids in November. Here’s the twist: Arco just issued $110mn in fresh debt last week–despite already being highly leveraged, in a surprising move on the eve of the buyout. Analysts estimate the deal will close in late Q4 or early Q1 next year. (Reuters)
🏷️ dLocal’s looking for a sale. According to reports from Bloomberg, the Uruguayan payments unicorn is using a financial adviser to explore talks for a private buyout. While no final decision has been made (so there’s a chance the company remains independent), dLocal has received takeover interest from potential buyers, according to people familiar with the matter. Shares rose 9% on the announcement, pushing dLocal’s market cap above $4bn. (Bloomberg)
What’s Not
👋🏽 Binance’s mass layoffs. As part of a 1,000-person global layoff wave, the crypto platform has cut 150 people from its Brazilian workforce amidst claims of “fear, anguish, and burnout”. The company has been in increasingly hot water around the world: most notably, an SEC lawsuit alleges Binance has been a ‘web of deception’, triggering an exodus of senior execs last month; meanwhile, in Brazil, the regulator has launched a multi-pronged probe into Binance’s alleged facilitation of pyramid schemes and illegal crypto derivatives trading. (Brazil Crypto Report)
🏦 Rappibank ditches Peru. The Colombian delivery platform and its local Peruvian partner, Interbank, have mutually parted ways to end service for their credit card after two years of the joint venture. Customer cards will stop operating on September 23rd, while the platform’s other products will continue as usual. Despite Rappi’s attempts to launch a ‘superapp’, growth for its credit cards has been slower than that of many competitors, causing both parties to kill the deal. (Iupana)
Stat of the Week
For GA and Dragoneer to be taking Arco private at a 50% premium, they must believe in serious upside for the edtech. But how did Arco get to this point?
So what? Since IPO in 2018, Arco’s growth journey has been a mixed bag. Its cost base has proven to be relatively fixed, so operating profit have trended with its somewhat lumpy revenue growth. The biggest recent change was its majority acquisition of isaac, the fintech-for-schools platform that Arco integrated into its P&L in Q1-23. Off-stage, Arco’s interest charges have put significant pressure on its cashflow, spurring both the takeover and its new debt issuance.
From the outside, it seems like GA and Dragoneer want to run a classic PE playbook: make sure the post-merger integration runs smoothly, rip out costs where possible, and fix the balance sheet for a re-listing in 5-7 years’ time.
The Rundown
Mexico-born fintech unicorn Clara is moving its HQ to Brazil after securing a payments institution licence. (Reuters)
Mercado Libre’s CFO is stepping down. Who will replace him? (Bloomberg Linea)
A record number of Latinos in the US are joining S&P 500 companies as executives this year. (Bloomberg Linea)
Telefonica is teaming up with Musk's Starlink to connect remote customers in LatAm. (Reuters)
Network effects: Inside the 9 startups founded by ex-Creditas employees. (Startups Brasil)
Amazon unveils the lucrative benefits for its new Brazilian credit card as adoption surges in its first week. (Startups Brasil)
SoftBank’s Vision Funds post a $1.1bn profit after 5 straight quarters of losses. (Neofeed)
Deals (August 8-14, 2023)
M&A
🇲🇽 Neubox, a web hosting and domain registration platform, acquired 🇲🇽 Hospedando.mx, a competitor. Financial details were not disclosed.
Fundraises
🇧🇷 Dr. Consulta, a telemedicine platform, raised a $25.5mn Series D from IDB Invest, JICA (Japan), Kamaroopin, and Lightrock.
🇧🇷 PlanetaryX, a blockchain-based financial platform for ecological preservation, raised a $2mn round from undisclosed investors.
🇸🇻 Cubo, a payments platform for MSMEs, raised a $750k investment from the IDB as part of a $3.5mn seed round.
Debt
🇧🇷 Asaas, a fintech for SME banking, raised a $10mn credit receivables fund (FIDC), the second type it has raised.
VC Funds
🇧🇷 4Equity, a media-for-equity fund, has a $100mn fund to invest in Brazilian B2C startups that have already received Series A or B funding.
🌎 UNICEF Venture Fund is seeking to write up to $100k cheques of ‘free equity’ in seed-stage ventures focusing on helping the world’s most vulnerable youth.
Simon Rodrigues is a consultant, writer, and speaker specialising in strategy and storytelling for early-stage startups.