BBVA has reached an agreement to invest $300 million in Brazilian digital bank Neon.
With this new investment, BBVA acquires a 21.7% stake in Neon. The Group already held a stake since 2018 through its venture capital fund Propel. Following this transaction, BBVA’s stake will total 29.7% of Neon.
Neon represents a new step in BBVA’s strategy to enter new markets through investments in digital platforms.
“The commitment to innovation is part of BBVA’s DNA, and digital is opening new ways for us to grow in very attractive markets,” BBVA Chairman Carlos Torres Vila said. “Neon’s value proposition connects with the financial needs of Brazilians serving as a platform to continue to grow rapidly in a market with great potential.”
The deal with Neon adds up to other investments by BBVA in digital platforms, such as Atom Bank in the U.K. and Germany’s Solarisbank. Additionally, BBVA recently entered the Italian retail banking market with a 100% digital offer.
Neon was founded in 2016, aiming to offer a simple, and competitive alternative compared to the traditional Brazilian banks. Through a unique product offering –including free checking accounts, debit and credit cards, payroll loans and specialized products for small businesses– Neon has set itself apart from the competition with a focus on the individuals, self-employed and small businesses.
Since its creation in 2016 and prior to BBVA’s investment, Neon had raised $423 million from investors through several financing rounds. Its shareholders include General Altlantic, Vulcan, BlackRock, Paypal and Banco Votorantim. Neon’s management team includes founder and CEO Pedro Conrade and executive managing partner Jean Sigrist, who will continue to lead the company.
“BBVA’s investment and global expertise will allow Neon to offer loans in a more simple, sustainable and inclusive way. We want to reach more Brazilians, contributing to reducing inequalities and making a difference in their lives. Neon will continue to grow rapidly, while delivering on its purpose,” Neon founder Pedro Conrade said.
Share subscription and payment are expected to take place in February. The transaction will have a capital consumption of about 10 bps in BBVA’s fully-loaded CET1 capital ratio.