RRising rates and tight credit have dampened the flow of venture capital to fintech startups in Latin America, putting pressure on some fledgling fintech companies in the region. This could lead to consolidation.
Nubank founder and CEO David Vélez predicts a series of mergers and acquisitions in the Latin American fintech ecosystem in the coming months. And although the São Paulo-based digital bank saw its stock price plunge in a recent tech sale, Vélez thinks it could lead to some interesting buying opportunities for Nubank.
“We will be looking to do more mergers and acquisitions,” Vélez told the FinancialTimes.
Vélez told the publication that there are now “about 40 different digital banks” in Brazil, which he said “was probably too many.” Consumers won’t have 20 different payment apps on their smartphones. It’s too complex. You could have three or four, not 20.”
“There is going to be a streamlining of some of the fintechs out there, there will probably be some consolidation,” Vélez added. “This will allow the survival of the fittest.”
Nubank is one of the holdings of EMQQ Global Emerging Markets Internet & E-Commerce ETF (NYSE Arca: EMQQ) and Next Frontier Internet and E-Commerce ETF (FMQQ)which are designed to provide exposure to the Internet and e-commerce sectors in developing countries.
By focusing on the Internet and e-commerce in emerging markets, EMQQ seeks to capture the growth and innovation occurring in some of the largest and fastest growing populations in the world. More than 60% of EMQQ’s assets are directed towards China.
FMQQ, on the other hand, seeks to provide investment results that, before fees and expenses, generally correspond to the price and yield performance of the Next Frontier Internet and Ecommerce Index (FMQQetf.com). Although it has the same investment philosophy as EMQQ, FMQQ has no China-based holdings. Securities must meet a minimum market capitalization of $300 million and pass a liquidity filter that requires an average daily turnover of $1 million.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.