DLocal, the Latin American payments provider backed by private equity firm General Atlantic as its largest shareholder, is exploring strategic options, including a potential sale, according to a report by Reuters citing sources familiar with the matter.
The Montevideo, Uruguay-based company, which has a market value of approximately $3.6bn, has engaged Morgan Stanley to evaluate acquisition interest.
Among the potential acquirers are private equity firms and major financial technology companies, the sources noted, while highlighting that a deal is not guaranteed.
Following the news, DLocal’s shares surged nearly 14% on Wednesday before tempering some of the gains.
This marks the second time DLocal has considered a sale. A similar process initiated last year fell through after disagreements over financial terms with suitors, one source reportedly said.
The interest in DLocal comes as interest rises in undervalued payments companies. The sector, which experienced a pandemic-driven boom in digital transactions, is now grappling with slowing growth, intensified competition, and challenges tied to currency fluctuations in emerging markets. These factors have depressed valuations and spurred consolidation.
The payments industry has seen a flurry of recent deals.
In April, Advent International secured a $6.3bn acquisition of Nuvei, a Canadian payments technology company backed by actor Ryan Reynolds. Meanwhile, Lightspeed Commerce, another Canadian payments firm, is reportedly exploring a sale.
DLocal, which operates across Latin America as well as parts of Africa and Asia, boasts high-profile clients including Amazon, Microsoft, and Google. Despite its expansive footprint, the company has faced challenges, including exposure to weaker currencies in markets like Argentina and declining cross-border payment volumes.
DLocal’s shares, which debuted on the New York Stock Exchange in 2021, have fallen 33% year-to-date as of Tuesday’s close. However, the company reported a modest 5% increase in gross profit in its latest quarterly earnings, driven by improved volumes in some markets despite losing market share in credit card payments in Brazil and rising expatriation costs in Argentina.
