A look at what the investment means and how Berkshire Hathaway has exposure to digital banking in several emerging markets
Warren Buffett just gained greater exposure to the burgeoning digital bank sector in Africa and Asia.
What Happened: Nu Holdings NU-2.23% Free Alerts — backed by Buffett’s Berkshire Hathaway
BRK — led a new funding round for Singapore-based Tyme Group.
Tyme specializes in building digital banks in emerging markets. Nu Holdings, which owns Brazil-based Nubank, invested $150 million for a 10% stake. The funding is part of a $250 million Series D round that values Tyme at $1.5 billion, TechCrunch reported on Monday.
Since launching in 2019, Tyme has raised $600 million. The startup is backed by African Rainbow Capital, which owns 40% majority stake.
Why It Matters: Tyme mainly operates in South Africa and the Philippines, where it has 10 million users and 5 million users, respectively. The company has physical service locations and specializes in online banking, making it a hybrid digital banking model, according to the report.
Tyme, which operates as TymeBank in South Africa and as GoTyme in the Philippines, provides customers with debit cards, checking accounts, savings accounts, buy now pay later offerings and cash advances.
Tyme aims to go public with an IPO in the U.S. in 2028, according to the report. A secondary listing will take place in South Africa. The company plans to expand into Indonesia and Vietnam in 2025 as part of its Asian expansion.
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Nu Holdings could help Tyme diversify into new geographies with strategic partnerships. It may also expand its stake in the company as digital banking across emerging markets continues to grow.
“We are excited to work with Tyme to share many of our learnings of scaling this model to hundreds of millions of customers,” Nubank CEO David Vélez said.
Nu Holdings’ Nubank is a large player in Brazil. It has also expanded to new markets like Mexico and Colombia in recent years.
In the most recently reported third quarter, Nu Holdings reported record quarterly revenue of $2.9 billion. That’s up 56% year-over-year. The company reported 109.7 million global customers, including around nine million in Mexico and around two million in Colombia, its two newest markets.
Several analysts raised their price targets on the digital bank company after the earnings report, including:
- Goldman Sachs: Maintained Buy rating, raised price target from $17 to $19
- Susquehanna: Maintained Positive rating, raised price target from $16 to $18
- KeyBanc: Maintained Overweight rating, raised price target from $15 to $17
Berkshire Hathaway invested $500 million in Brazil-based Nubank back in June 2021. It currently owns 86,438,997 Nu Holdings shares, representing a stake of around $1 billion and 1.8% of the company, according to a recent 13f filing and CNBC.
Nu Holdings has also ventured into cryptocurrency services. The company previously disclosed that it would allocate a portion of its cash to Bitcoin
BTC/USD, representing one of the ways Buffett has exposure to the leading cryptocurrency he once said was “probably rat poison squared.”
Price Action: Nu Holding stock trades at $11.75 on Tuesday versus a 52-week trading range of $8.06 to $16.15. Nu Holdings stock is up 44% year-to-date in 2024.
