Dive Brief:

• DLocal, a cross-border payments company based in Montevideo, Uruguay, raised $75 million in an initial public offering, the company said. The bulk of shares in the offering were sold by existing stockholders, according to the company's regulatory filing for its initial public offering (IPO). The company said it expected 29.4 million shares to be sold at $21 per share, according to a June 2 press release. The stock jumped 54 percent on its first day of trading to close at $32.39 on the Nasdaq Global Select Market.

• Previously, the company raised $150 million in April 2021 in a private fundraising round led by investment firm Alkeon Capital and including hedge fund Tiger Global, taking the company’s valuation to $5 billion. It also raised $200 million last September, with private equity firm General Atlantic injecting additional capital into the company. DLocal provides payment options to customers in their local payment methods and local regulatory compliance to merchants to collect payments. 

• “The fragmented payment system in emerging market countries hampers global merchants’ ability to expand in these new markets,” 'DLocal Chief Operating Officer Sumita Pandit told Payments Dive in an email. “Local payment methods represented 83% of the total emerging markets e-commerce expenditure in 2020. DLocal is the 'one-stop shop' designed specifically to let global merchants consolidate their transaction services.”

Dive Insight:

DLocal's June 3 IPO generated $617 million in proceeds, most of which went to selling shareholders, including company co-founders Sergio Enrique Fogel Kaplan and Andres Bzurovski Bay. The company raised $75 million from the sale of 4.4 million shares, a spokesperson for the company said.

The company plans to use the proceeds to invest in technology; manage potential working capital needs like offering advanced payments to DLocal's merchants; and expand its footprint rapidly to new emerging markets. 

DLocal nearly quadrupled its valuation between September 2020 and April 2021, with the earlier mega-funding rounds. Now, the IPO has vaulted DLocal’s valuation to $9 billion, according to Reuters.

Kaplan and Bay each sold 5.6 million shares in the IPO along with General Atlantic, which sold 6.6 million shares, though each continues to own a significant stake in the company.

“By deepening current relationships, expanding solutions, and increasing our presence in emerging markets, we expect to continue growing as existing and new merchants further rely on our capabilities to do business,” Pandit said. “Going public allows us to continue that rapid growth.”

DLocal connects emerging market consumers with e-commerce merchants across the globe and facilitates cross-border transactions. DLocal allows e-commerce merchants to sell products in emerging markets and collect payments that are preferred by local buyers.

In 2020, consumers and businesses worldwide made $454 billion purchase transactions on global network cards, compared to $440 billion in 2019, according to the Nilson Report. The share of e-commerce as a percentage of total global retail payments volume expanded to 21% in 2020 up from 16% in 2019, partly aided by the accelerated shift to online purchasing during the ongoing COVID-19 pandemic, according to Digital Commerce 360, an e-commerce think tank. 

DLocal’s payment facilitating platform grew during the pandemic as a result of increased online purchases made during the pandemic. The company's revenue nearly doubled to $104 million last year, up from $55.3 million in 2019. Gross profit followed suit, jumping to $60.08 million last year, from $35.9 million in 2019.

DLocal’s total payment volume (TPV) in Q1 2021 was $925.9 million compared to $388.2 million in Q1 2020, according to the company’s F-1 filing. In 2020, DLocal’s TPV was $2.1 billion compared to $1.3 billion in 2019. 

DLocal earns revenue from fees charged to merchants for cross-border payment processing services and local payment transactions in emerging markets. These fees are primarily generated on approved transactions as either a fixed fee per transaction or a fixed percentage per transaction. DLocal’s clients are in industries that include video-streaming, financial services, advertising, software-as-a-service, and gaming, among others.

The company's approximately 330 merchants include tech giants Amazon and Microsoft as well as the music-streaming service Spotify. With DLocal, these e-commerce sellers can connect to buyers in emerging markets in Latin America, Africa, the Middle East and Asia. It operates in 29 countries and reached two billion internet users in 2020.

Other payments companies, including Flywire and Paymentus, recently sold stock in IPOs, seeking funds to build on expansion experienced during the pandemic. Flywire raised $250 million while Paymentus, a bill management and payments company, raised $210 million.