RIO DE JANEIRO, BRAZIL – BTG-controlled Banco Pan will merge with Mosaico technology company, owner of the Zoom, Bondfaro and Buscapé brands.The deal marks the latest development of the Brazilian investment bank bolstering its marketplace area, a trend which has Inter bank as its main example and which has consolidated in recent months.
Meanwhile, technology companies have been penalized in the stock market in recent weeks, as the SELIC interest rate increase has adversely affected high-growth companies.
The swap ratio will be of 0.8 Pan shares for each Mosaico share. In addition, there will be warrants issued, to be traded on the stock exchange at a face value of R$4 (¢74).
The stock warrant will be paid if Pan’s shares close higher than R$24 for at least 3 consecutive trading days in the coming 30 months. Initially, Mosaico shareholders will hold a 7.9% stake in Banco Pan, which can increase to 9.2% if the warrant is exercised. The transaction is expected to be completed within 90 to 120 days.
Pan’s CEO Carlos Eduardo Guimarães said that the merger with Mosaico has potential
While the bank had on its roadmap to set up a marketplace, Mosaico recently launched a cashback plan and intended to have a credit card operation later this year. “Our teams have complementary capabilities and a very similar cultural profile. We are super excited, the cross-selling opportunities are huge. We will scale the cashback, the ‘buy now, pay later’, we will have a credit card,” he says.
With 12.5 million customers, Banco Pan will feature a marketplace area in its app offering Mosaico’s services, which in turn will have Pan’s products on its websites. “The new company’s combined growth potential is much greater. We will lower customer acquisition cost (CAC) and increase lifetime value. Our capacity for organic and inorganic growth is greatly increased,” adds Guimaraes.
In January, BTG had announced an agreement with Mosaico. Through the partnership, which has an initial term of 5 years, Mosaico will offer cashback benefits to users through a virtual wallet and payment accounts operated by BTG on a co-branding basis.
In addition, BTG will offer financial, banking and insurance services in general to users of Mosaico’s platforms and distribution channels. And the development of a BTG e-commerce platform on its electronic channels (marketplace), to offer specific consumer goods currently transacted in the Mosaico ecosystem.
Currently, BTG holds a 13.31% stake in Mosaico. Founders Roberto Wagner Ferreira Malta, José Guilherme Milek Pierotti and Guilherme Goulart Pacheco are the controlling shareholders.
This would be the first merger between a bank and a technology company listed on the B3 stock exchange.
Mosaico first listed on the exchange in February and raised nearly R$1 billion in its IPO. Shares soared over 90% in the debut, but with the slump in recent weeks it has now accumulated a 36.3% drop since the offering.
Mosaico’s sales volume (GMV) reached R$1.919 billion in the first half of the year, up 2.1%. The monthly average in the period was 23.8 million single visitors. Gross revenue fell 3.8%, to R$111.6 million, while profit plummeted 84.1%, to R$3.6 million.
Pierotti says that the basis of comparison with last year is complex, as with the closure of physical stores at the start of the pandemic, virtually everyone went online. “Those numbers are complicated. But we made it very clear in the IPO that our strategy involved hiring staff, accelerating growth, and that’s why our EBITDA margin would drop to single digits.”
Pan has a card-issuing agreement with Méliuz, a well-known cashback company, and also intends to start offering more financial products. According to Guimarães, this partnership currently accounts for approximately 10% of cards issued by the bank and has lost some steam in recent months. The partnership with Méliuz will remain, but it is obvious that now Pan’s total focus is on Mosaico.
Pierotti says the deal is beneficial for Mosaico’s shareholders and recalled that the company’s founders have lockups of 18, 24 and 30 months for each third of their holdings.
Each of them has over 20 years of experience in the technology market, and with Mosaico’s nearly 300 employees Pan will exceed 1,000 staff in the IT area. Pierotti will be Pan’s e-commerce director and Pacheco will join the bank’s board of directors.