Those who have a “little piece” of Nubank will be able to choose between two main options: sell the asset or exchange it for BDR level I
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Although last week Nubank announced its delisting on the Brazilian stock exchange, B3, the digital bank will continue to trade BDRs – Brazilian Depositary Receipts. However, the fintech will only be publicly traded on the New York Stock Exchange (NYSE), in the United States.
As a result, Nubank made three alternatives available to investors with BDRs in their portfolio:
- Exchange the assets for shares traded directly in the United States;
- Swap the level III BDR for a level I one;
- Sell your positions.
Little piece of Nubank
Thus, among those who bought a “little piece” of Nubank, there are several individual investors, many who had never invested in the Stock Exchange before.
In summary, in December 2021, the digital bank offered the “little piece” in the public offering of shares (IPO). Therefore, this little piece was a BDR made available to Nubank customers at no additional cost – one of the many strategies used by the digital bank to reach 7.5 million customers for the IPO.
“It is quite disappointing for the capital market that after encouraging millions of Brazilians to become ‘naked partners’, Nubank sees that the liquidity of the papers was not the desired one and the charges to maintain the BDRs did not compensate for the costs”, said William Castro Alves, chief strategist at Avenue Securities.
Therefore, many investors are in doubt what to do with the BDR they acquired. According to Mario Goulart, investment analyst and creator of the channel “O Analisto”, this investor will be able to choose between two main options: sell the asset or exchange it for BDR level I.
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“The ‘little piece’ of Nubank put people on the stock exchange who had never invested before and who probably do not have enough information and knowledge to manage a portfolio on the New York Stock Exchange”, he explained.
Level I BDR is not the best option for those who have a “little piece” since the IPO, as this investment instrument has less liquidity.
Thus, due to low liquidity, the BDRs that will continue to be traded on B3 may end up being discounted. For those looking for the performance of the role, it is worth making the conversion to shares on the New York Stock Exchange.
In addition, an individual investor may find it more difficult to manage the level I BDR.
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