Nubank’s plan to restructure its Brazilian Depositary Receipt (BDR) program

São Paulo, Brazil, April 5, 2023 | Latest update on October 31, 2023 – Nubank, one of the world’s largest digital banking platforms, announced plans in September 2022 to restructure its Brazilian Depositary Receipt (BDR) program in Brazil to pursue increased efficiency and continue to build long-term value for investors and customers. The process was concluded as of October 2023 and it is now fully complete.

The BDR program was launched during Nubank’s IPO in late 2021 to allow Brazilians to become company investors within the local market. It also enabled the creation of NuSócios, a financial inclusion initiative by which Nubank granted customers a “pedacinho” (one BDR) free of cost and offered a free financial education program, democratizing access to stock market investments in Brazil and fostering financial literacy.

The approved BDR restructure plan was designed to ensure BDRs continue to be listed and traded in the Brazilian Stock Exchange (B3) but change their Level from III to I Unsponsored, which provides cost efficiencies. Nubank is still listed on the NYSE and regulated by the U.S. Securities and Exchange Commission (SEC).

The plan approved by CVM (the Securities and Exchange Commission of Brazil) in June 2023 granted flexible options for investors and NuSócios regarding their BDRs by which holders were able to opt within a 30-day period between the following alternatives:

1) receive class A ordinary shares traded at NYSE at a ratio of 6-1 (conditional on having a sufficient number of BDRs and an active brokerage account in the US);

2) exchange their current BDR III for an unsponsored BDR I at a 1-1 ratio; or

3) sell the shares underlying the BDRs.

Timeline and updates

• September 2022: Nubank submits a request to B3 and CVM to restructure its BDR program from Level III to Level I. More information on this link. 
• December 2022: The CVM Board authorizes Nubank’s request and establishes that investors who do not make an explicit choice during the option window will have their BDRs sold and receive the proceeds. More information on this link.
• April 2023: Nubank submits an updated petition to CVM, establishing that the BDR Level I will be unsponsored and is expected to be established by Banco Bradesco S.A., Brazil’s largest depository institution according to Anbima. As such, Bradesco would become responsible for all local regulatory disclosures, while Nubank is still committed to translating and publishing its SEC regulatory filings on the IR website. More information on this link.
• June 2023: CVM approves the plan submitted in April 2023 to restructure the BDR program in Brazil. This milestone was communicated to the Market through a Material Fact. Nubank will keep the market and shareholders informed about the next steps of the process, including the beginning of the 30-day window to choose between the conversion, sale or exchange of BDRs, as described above. Notifications will happen through email, and also in-app for NuSocios.
• July 2023: The Aviso aos Detentores de BDRs is issued on July 10, 2023 and announces that the opt-in period for investors and NuSócios will run from July 13, 2023 to August 11, 2023. During this time frame, BDR holders may choose between converting, selling or exchanging their BDRs. Those who do not submit a choice will receive the proceeds from the sale of the underlying shares of their BDRs.
  • NuSócios, Nubank and NuInvest customers may also submit their choice in the Nubank app.
  • All BDR holders may contact in advance their respective local custody agents or brokerage to understand the necessary arrangements, deadlines and rules of said agents or brokerages.
• August 2023: on August 11 2023, the company issued a Notice to inform the market about the closing of the choice period, which included an estimated reference value per BDR (before applicable taxes) based on the closing price of the Class A Ordinary Shares on the NYSE on August 10, 2023. This should be considered an estimate only as the final price will depend on the results of the sales procedure. On August 14, the unsponsored BDRs began trading at B3 under the ticker ROXO34.
• September 2023: After conclusion of the sales procedure, the value of R$5,98 per BDR was defined to be paid to Level III BDR holders who opted for the sale of the BDRs. The final value was disclosed in a Notice to BDR holders on September 13th, 2023.
• October 2023: CVM approved the termination of Level III BDR Program and Nubank’s deregistration as a foreign issuer of category “A” securities. A final Material Fact has been released to shareholders informing the decision.

Frequently Asked Questions

What are unsponsored BDRs Level I? 

The unsponsored BDR I was created by CVM and B3 to provide the market with an instrument that enables Brazilians to invest in foreign-listed companies within the local market by allowing third-party institutions to establish a BDR program without the mandatory direct involvement of the issuer. There are more than 800 unsponsored BDR I programs listed on B3, among them Google, Apple, and Disney. 

Why are Nubank BDRs going to be established by a different financial institution? 

After Nubank filed its intention to restructure the BDR program, Banco Bradesco S.A., the current depository of the Level III BDRs, signaled interest to continue with the unsponsored BDR Level I program and to carry out the procedures to list Nubank’s BDR in the local market; this alteration on the level of the BDR program does not cause any significant change for investors. Bradesco is Brazil’s largest depository institution according to Anbima.

What is the size of the BDR float and how will this program impact Nubank?

The majority of Nu stocks are traded on NYSE which ensures access to the largest capital market in the world. The current ratio of BDR-to-total issued shares is less than 0.5%. While the BDR float is relatively small compared to the total capital, we are confident that there is rising local market interest for investing in Nu BDR, as indicated by recent independent research analysts.

NuInvest’s platforms were integrated into the Nubank application in May 2024. Now, the investment experience is centralized in the Nubank app.