Banco Bradesco, Brazil's second-biggest bank by market value, plans to buy more minority stakes in tech companies to speed up its expansion in the U.S.
"We are going to be investing in digital firms that can help us foster our growth in every single area that we participate, such as investments, financing, credit cards, payments, cybersecurity," Leandro Miranda, Bradesco's head of private equity and venture capital, said in an interview.
The lender has already invested $700 million in minority stakes in tech firms in Brazil and the U.S., and is seeking more partners in businesses that "would be extremely expensive to develop on our own, or would take too long for us to develop," Miranda said.
Brazilian banks see an opportunity to expand by helping clients with investments and financing needs in the U.S. The lenders' deep familiarity with Latin America allows them to be more comfortable with the process of opening accounts or approving credit to the Latino community.
The target companies will also benefit, he said, because "they burn cash fast in order to grow, and we pay decent money" in an environment in which capital has become scarce and expensive.
Seizing benefits
Bradesco struck a partnership with the Miami-based fintech BCP Global in December 2021, and since then has been using that company's platform to offer digital investments to upper-middle-class and rich Brazilians.
The Osasco-based bank in March participated in a $44 million round of investments in ChargeAfter, the digital network that connects retailers and banks in order to provide consumers with approved financing offers from multiple lenders with a single application. ChargeAfter operates in the U.S. and Israel.
"We just want to make sure that we have operational agreements with those firms, so we can seize the benefits when they grow," Miranda said, adding that Bradesco often has the right of first refusal if the company plans to sell control to a competitor. "If they want to do public equity offerings, that is usually fine with us," he said.
Bradesco plans to use fintechs partnerships as "white label" operations, he said. "We put our logo there, and preserve the way they work, so they can update themselves very quickly, and we can have updated infrastructure in the cloud the whole time."
Bradesco controls its own fully licensed commercial bank, broker-dealer and financial advisory firm in the U.S. after it cut a $500 million deal in 2019 to purchase Coral Gables, Florida-based BAC Florida Bank, now called Bradesco Bank. The lender is adding $200 million in capital to its U.S. subsidiary, which serves rich and high-income individuals, Bradesco executive vice president Marcelo Noronha said in November.
Brazilians represent about 25% of Bradesco Bank's clients, while other Latin American nations account for 35%, according to Miranda, who is also responsible for the Florida business. The rest are U.S. citizens.
"We are transforming our digital investment platform with BCP into a digital brokerage house this month, so our clients will be able to invest in any U.S. stock, and then, in July 2023, they're going to also be able to invest in bonds and funds," he said.
Florida mortgages
According to Miranda, Bradesco Bank is already the biggest financier of residential mortgages for foreigners in Florida, and the plan is to increase the bank's lending portfolio and promote wealth management services.
But Bradesco plans to go beyond serving the rich. It's also helping to provide credit to lower-income individuals in the U.S., after acquiring a stake for $10 million in OneBlinc, a Miami-based firm founded by Brazilians. OneBlinc offers payroll loans, accounts and debit cards to state and federal government employees and health care workers.
"We realized that the U.S. Latino and Black population is pretty much underbanked," Miranda said, adding that the bank intends to bring its systems to the U.S. and offer "breakthrough technology" to help address the problem.
Bradesco already has more exposure than its peers to small companies and low-income individuals in Brazil, according to BTG Pactual.
"We are going to be investing in several fintechs all over the U.S. to get local knowledge about clients, to understand their needs, their behavior, and how we can take our systems into that," Miranda said.
