Itau Said in Talks to Buy XP, Brazil's Third-Biggest Brokerage

  • Bank would acquire the firm instead of a planned IPO
  • General Atlantic could also decide sell a stake in XP

Itau Unibanco Holding SA is in talks to acquire XP Investimentos, the nation’s third-biggest brokerage by equity-trading volume, according to two people close to the deal.

Itau, the biggest bank in Brazil by market value, would acquire the firm as an alternative to an initial public offering by XP, the person said, asking not to be identified because the discussions are private. XP, backed by private-equity firm General Atlantic LLC, filed for the IPO Tuesday, another person said. Proceeds would be used for investments and growth, other people said last year, adding that General Atlantic may also sell a stake in Rio de Janeiro-based XP.

XP and Sao Paulo-based Itau declined to comment. The Estado de S Paulo newspaper reported earlier that Itau presented an offer to buy XP, without saying where it got the information.

XP is seeking a banking license in Brazil and plans to expand in New York, Miami and Geneva to cater to high-net-worth investors.

General Atlantic acquired an additional 16 percent stake in XP in a deal announced in April last year, increasing its holding to 49 percent through a capital injection and the acquisition of a 10 percent stake held by Actis LLC. General Atlantic’s first investment in XP was in December 2012, when it took a 31 percent stake for about 420 million reais ($124 million). Actis, which bought 20 percent for $58 million in November 2010, cut that holding to 10 percent in the 2012 transaction.

XP accounted for 10.8 percent of the equity-trading volume in Brazil for the first three quarters of 2016, up from 9.9 percent in the same period of 2015, according to data compiled by the nation’s top brokerage firms.

XP is being compared with Charles Schwab Corp. for bringing online investing platforms to the middle class. The firm became the nation’s third-biggest brokerage in Brazil by giving middle-income clients specialized advice, open platforms and products that previously had been available only to wealthy customers at the biggest banks.

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