XP Investimentos
Date of original investment: 2010
Deal type: Expansion
Deal size: $US58m
Deal type: Expansion
Deal size: $US58m
A pioneer firm in the country of tomorrow
Since 2003, Brazil’s staggering rate of growth has seen 25 million people enter the middle class. Their purchasing power has led to a boom for consumer industries. But for those wanting to secure their prosperity, spending money today has given way to the desire to invest and safeguard tomorrow.
Established in 2001, XP Investimentos (XP) has grown over the last ten years from a start-up to the country’s largest independent retail brokerage. Brazilians have traditionally invested in savings accounts and physical assets like real estate but XP’s management team recognised early on in the company’s development that what was stopping people from investing in equities was their lack of financial savvy. So they launched a range of training courses covering everything from investment basics to advanced portfolio management, giving people the know-how they need to participate in the world of investing and managing wealth.
Education brings opportunity
Today, XP is also the country’s largest financial education provider. It has trained some 500,000 people and offers more than 350 seminars every month. And with many students going on to become loyal XP customers, its paid-for courses have enabled the company to grow organically at very low cost. In a market dominated by universal banks, who limit their offering to their own products, it has become a trusted brand and the platform of choice for independent financial advisors, with 1,200 professional investment brokers using its state-of- the-art technology platform and support service to manage their clients.
The potential for growth remains impressive. Currently only 0.3% of Brazilians invest directly in equities. That is well below India (1.4%), China (3.1%) and tiny when compared with the developed markets (average 30%). But people’s growing confidence in the prevailing macroeconomic outlook and the stability of the currency means Brazil’s equity culture is picking up pace.
Creating Brazil’s largest financial shopping centre
We invested in XP in 2010 to help the company to expand its network and further build the technology and product development capabilities that will grow its market share. The vision is to make XP Brazil’s largest ‘financial shopping centre’ able to provide customers with access to stock exchanges, mutual funds, bonds, pensions, insurance, and a range of other financial products, all in one place. We have paired our financial capital with intellectual capital, introducing Mark Collier, a former senior executive of Charles Schwab, to XP’s board to assist it as it grows.