XP Inc. Comments on November 26, 2020 Announcement by Itaú Unibanco Holding S.A.

Rhea-AI Summary

XP, a leading financial services provider in Brazil, announced that Itaú Unibanco's board approved a spin-off of its 41.05% stake in XP into a new company, Newco. This spin-off may include a sale of 5% of XP’s shares. XP is exploring corporate structures to align interests with Itaú and improve governance, focusing on eliminating conflicts and leveraging capital structure. A potential merger of Newco into XP is under evaluation, which would facilitate the issuance of Class A shares to Newco shareholders, ensuring long-term benefits for XP and its stakeholders.

Positive

• Itaú's board approval allows XP to enhance its governance structure, potentially increasing shareholder value.
• Exploration of corporate structures aims to align interests between XP and Itaú, which could optimize operational efficiency.

Negative

• The spin-off may lead to uncertainties regarding XP's future governance and operational strategy.
• XP's dependency on Itaú's actions could expose it to risks related to Itaú's financial decisions and market position.

SÃO PAULO, Brazil, Nov. 27, 2020 (GLOBE NEWSWIRE) -- XP Inc., or XP, a leading, technology-driven platform and a trusted provider of low-fee financial products and services in Brazil, today commented, following the material fact released to the market on November 26, 2020, or the material fact, by Itaú Unibanco Holding S.A., or Itaú, in which Itaú communicated (i) the approval by its board of directors of the spin-off of its investment in XP, which will be segregated into a newly formed company, or Newco, whose only assets would be common shares of XP representing 41.05% of XP’s share capital, and (ii) the potential sale by Itaú of 5% of XP’s share capital, as previously communicated by Itaú on November 3, 2020, that XP has initiated studies on possible corporate structures that seek to maintain the interests of Itaú aligned with those of XP and their respective shareholders and agree on any necessary changes to XP’s corporate governance to allow for the implementation of such structures.

XP is seeking to enhance its corporate governance structure, including by eliminating any potential conflicts of interests and maximizing its leverage potential through its capital structure, in a way that only the controlling shareholders of XP would hold Class B common shares, which carry supervoting rights.

As part of its studies and discussions, XP is evaluating a proposal to merge Newco into XP, which, if approved, will result in the delivery to Newco shareholders of Class A common shares of XP directly or through the issuance in Brazil of Brazilian Depositary Receipts. XP will conduct additional studies to finalize the corporate structure and ensure that it meets the best interests of XP and its shareholders.

About XP

XP is a leading, technology-driven financial services platform and a trusted provider of low-fee financial products and services in Brazil. XP’s mission is to disintermediate the legacy models of traditional financial institutions by:

• Educating new classes of investors;
• Democratizing access to a wider range of financial services;
• Developing new financial products and technology applications to empower clients; and
• Providing high-quality customer service and client experience in the industry in Brazil.

XP provides customers with two principal types of offerings, (i) financial advisory services for retail clients in Brazil, high-net-worth clients, international clients and corporate and institutional clients, and (ii) an open financial product platform providing access to over 600 investment products including equity and fixed income securities, mutual and hedge funds, structured products, life insurance, pension plans, real-estate investment funds (REITs) and others from XP, its partners and competitors.

Forward Looking Statements

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” variations of these terms or the negative of these terms and similar expressions are intended to identify these statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond XP’s control.

XP’s actual results could differ materially from those stated or implied in forward-looking statements due to several factors, including but not limited to: competition, change in clients, regulatory measures, a change the external forces among other factors.

For any questions, please contact:

Carlos Lazar, Head of Investor Relations	Investor Contact: ir@xpi.com.br
André Martins, Investor Relations Specialist	IR Website: investors.xpinc.com

 

FAQ

What is the significance of the Itaú spin-off for XP (XP) shareholders?

The spin-off allows XP to enhance its governance and potentially improve shareholder value through better alignment of interests.

What percentage of XP's shares is being spun off by Itaú?

Itaú is spinning off its 41.05% stake in XP into a new entity called Newco.

Is there a plan for Itaú to sell part of its stake in XP?

Yes, Itaú may sell up to 5% of XP's share capital as part of this restructuring.

What changes in corporate governance are being considered by XP?

XP is looking to eliminate conflicts of interest and ensure that controlling shareholders hold Class B shares with supervoting rights.

How could the merger of Newco impact XP?

If approved, the merger would allow Newco shareholders to receive Class A common shares of XP, potentially enhancing liquidity and shareholder engagement.