XP Buys Minority Stake in Capitânia Investimentos; Shares Rise

Focusing on corporate credit, real estate and infrastructure investments, Brazilian financial services technology platform XP Inc. (XP) has bought a minority stake in Capitânia Investimentos, an asset manager in Brazil. Following the news, shares of XP gained 1.5% in Friday’s trading session. The terms of the deal have not been disclosed yet.

Capitânia Investimentos, which manages over R$11 billion of assets for 30 investment funds and 80 institutional investors, is likely to strengthen XP’s portfolio and enhance its offerings.

Partner at XP Leon Goldberg said, “We have a longstanding relationship of over 10 years with Capitânia, and we are now taking the next step in strengthening our successful partnership. The investment in Capitânia is aligned with our vision of offering our clients the most complete investment ecosystem in the market, including access to alternative and innovative products.” (See XP stock analysis on TipRanks)

Recently, Credit Suisse analyst Marcelo Telles upgraded his rating on the stock to Hold with a price target of $43 (2.7% downside potential).

According to Telles, the ‘significant stock de-rating’ over the past year has resulted in the stock having a reasonable valuation. “However, the persisting fierce competition, low-interest-rate environment and Itaú Unibanco’s spinoff can be causes of concern for the company,” he added.

Consensus among analysts is a Hold based on 1 Buy, 2 Holds, and 1 Sell. The average analyst XP price target stands at $44, which implies the stock is fairly valued at current levels. Shares have gained 5.8% over the past year.

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