Behind the “IPO of the decade”: the story of XP Investimentos

From two unemployed youngsters teaching people how to invest in the stock market, to the leading investment platform in Brazil, co-owned by the largest bank in South America. In the space of 18 years, XP Investimentos is now on the cusp of the “hottest IPO of the decade.”

Brazil’s largest digital investment platform is set to list its stocks for the first time later this month. The IPO will happen on Nasdaq, the American stock exchange famous for floating the largest tech companies in the world. If there’s enough demand, the offer may reach up to USD 2.1 billion, bringing XP’s valuation up to nearly USD 14 billion, according to estimates.

But in a country where just five banks control more than 90 percent of the assets under management, how can we explain investors’ excitement around a company that has only three percent of the market? The answer lies in an innovative business model and the chance to make the most of a booming sector. According to a report by consulting firm Oliver Wyman, commissioned by XP itself, the market share of investment assets held by independent investment firms in Brazil will grow from 7 percent in 2018 to 25 percent in 2024. And no other company is in a better position to enjoy this boom than XP. 

Turning lemons into lemonade

XP started in 2001, after current CEO Guilherme Benchimol was fired from a brokerage job in Rio de Janeiro, and moved to the southern city of Porto Alegre. There, he met his business partner Marcelo Maisonnave, and the two set up shop as autonomous investment agents. They soon realized there was a gap in the market for a company that not only helped people invest, but actually taught them how to do it.  

In 2007, they decided to buy a brokerage in Rio...