January 19, 2018 / 7:03 AM / in 7 months

Exclusive: Brazil credit card processor Stone plans New York IPO - sources

SAO PAULO (Reuters) - Brazilian credit card processor Stone Pagamentos SA is planning its initial public offering in New York by the second half of the year to raise funds to compete with larger rivals Cielo SA (CIEL3.SA) and the Rede division of Itaú Unibanco Holding SA (ITUB4.SA), three people with knowledge of the matter said.

A trader works on the floor at the New York Stock Exchange (NYSE) in Manhattan, New York, U.S., December 28, 2017. REUTERS/Andrew Kelly

Stone and investment banks have discussed a transaction in which the company would raise money and some shareholders would sell part of their stakes, the sources added, requesting anonymity because the talks are still private. Stone has not yet hired advisers.

The company, controlled by founders André Street and Eduardo Pontes, has among its minority shareholders British buyout firm Actis LLP and Brazilian investment firm Gavea Investimentos Ltda.

Other shareholders include 3G Capital Inc founders Jorge Paulo Lemann, Marcel Telles and Carlos Alberto Sicupira, as well as Madrone Capital Partners, a U.S.-based investment firm that manages part of the fortune of the Walton family, the majority owners of Wal-Mart Stores Inc (WMT.N).

In a statement, Stone said there was “no ongoing share offering.” Actis declined to comment. Gavea and Madrone did not immediately comment.

RACE TO GROW

Stone would be the second Brazilian card processing company to go public this year, as industry competition increases during a nascent economic recovery after the country’s harshest recession in decades.

PagSeguro Internet Ltda filed for an IPO last month, with underwriters Goldman Sachs & Co (GS.N), Morgan Stanley (MS.N), Credit Suisse Group AG (CSGN.S), Deutsche Bank Securities (DBKGn.DE) and Bank of America Merrill Lynch (BAC.N).

PagSeguro, owned by Brazilian media group Universo Online SA, plans to raise at least $1.6 billion. The IPO will price next week, with trading to begin on Wednesday on the New York Stock Exchange.

Stone shareholders are waiting to confirm the valuation of PagSeguro’s IPO before proceeding with the plans for their own offering, the sources added.

According to the sources, Stone has 4.5 percent of Brazil’s payment market, where a dozen credit card processors are competing for a share of robust growth.

In 2015, only 32 percent of Brazilians above age 15 had a credit card, compared with 60 percent in the United States, according to the World Bank.

($1 = 3.21 reais)

Additional reporting by Tatiana Bautzer; Editing by Lisa Von Ahn

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