PagSeguro's new share offering hurt AgiBank's IPO, says source.

(Reuters)- The subsequent share offering announced this week by the payment processing company PagSeguro has jeopardized the viability of AgiBank's initial public offering (IPO), a source familiar with the matter told Reuters.

The offering of Agibank, a financial institution from Rio Grande do Sul with a strong presence on its digital platform, was scheduled to be priced this Thursday. The offering's coordinators set an estimated price range of 13,87 to 16,95 reais per share.

Investor demand was more than twice the volume offered, allowing the operation to be completed despite the turbulence in financial markets in recent weeks, which dampened investors' appetite for assets considered higher risk.

“But this subsequent offer from PagSeguro did more harm,” said the source with direct knowledge of the matter, speaking on condition of anonymity because they cannot speak publicly about the issue.

The group, which started as a finance company in 1999 in Caxias do Sul (RS), gained traction after acquiring Banco Gerador in 2016, and now has almost 500 clients. The majority, around 400, are borrowers of credit and other financial services.

In the preliminary prospectus for the offering, Agibank stated that at the end of March it had 535,6 customers, a 68 percent increase over the previous year, served through digital channels and a network of more than 450 physical service points.

Although they are not direct competitors, since PagSeguro operates more intensely in the payment processing market, the company competes in part for the same resources from investors willing to buy Brazilian assets.

PagSeguro listed its shares on the New York Stock Exchange in a successful initial public offering that valued the company at approximately $9 billion. The company announced plans this week for a new share offering.