F-1 1 ff12021_picsltd.htm REGISTRATION STATEMENT

As filed with the Securities and Exchange Commission on April 21, 2021.

Registration No. 333-______

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

________________________________

FORM F-1
REGISTRATION STATEMENT

UNDER
THE SECURITIES ACT OF 1933

________________________________

PicS Ltd.

(Exact Name of Registrant as Specified in its Charter)

________________________________

The Cayman Islands

 

7389

 

N/A

(State or other jurisdiction of
incorporation or organization)

 

(Primary Standard Industrial
Classification Code Number)

 

(I.R.S. Employer
Identification Number)

Avenida Manuel Bandeira, 291

Block A, 2nd floor

São Paulo — SP, 05317-020, Brazil
+55 (11) 97723
-1925

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

________________________________

Cogency Global Inc.
122 East 42
nd Street, 18th Floor
New York, NY 10168
(212) 947
-7200

(Name, address, including zip code, and telephone number, including area code, of agent for service)

________________________________

Copies to:

Donald Baker
John Guzman

Karen Katri

White & Case LLP
Avenida Brigadeiro Faria Lima, 2,277 — 4
th Floor

São Paulo — SP 01452-000, Brazil

55 (11) 3147-5600

 

Manuel Garciadiaz
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017

(212) 450-4000

________________________________

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. £

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. £

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. £

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. £

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

Emerging growth company S

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act. £

____________

†        The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

 

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CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered

 

Proposed Maximum Aggregate Offering
Price
(1)(2)

 

Amount of
Registration
Fee
(3)

Class A common shares, par value US$0.000025 per share(4)

 

US$ 100,000,000

 

US$ 10,910.00

____________

(1)      Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

(2)      Includes Class A common shares to be sold by us.

(3)      Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price.

(4)      Include Class A common shares to be sold upon the exercise of the underwriters’ option to purchase additional shares. See “Underwriting.”

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine.

 

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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED         , 2021

PRELIMINARY PROSPECTUS

Class A Common Shares

PicS Ltd.

(incorporated in the Cayman Islands)

This is an initial public offering of the Class A common shares, US$0.000025 par value per share, of PicS Ltd. We are offering                Class A common shares in this offering.

Prior to this offering, there has been no public market for our Class A common shares. It is currently estimated that the initial public offering price per Class A common share will be between US$               and US$              . We intend to apply to list our Class A common shares on the Nasdaq Global Select Market, or Nasdaq, under the symbol “PICS.” We will not seek a listing for our Class B common shares on Nasdaq or on any other exchange.

Upon consummation of this offering, we will have two classes of shares: our Class A common shares and our Class B common shares. Our Class B common shares will carry rights that are identical to the Class A common shares being sold in this offering, except that: (1) holders of our Class B common shares are entitled to 10 votes per share, whereas holders of our Class A common shares are entitled to one vote per share; (2) our Class B common shares have certain conversion rights; and (3) holders of our Class B common shares are entitled to maintain a proportional ownership interest in the event that we issue additional Class A common shares. For further information, see “Description of Share Capital.” J&F Participações S.A., or J&F Participações, will beneficially own 100% of our Class B common shares, which will represent approximately         % of the combined voting power of our outstanding share capital following this offering, assuming no exercise of the underwriters’ option to purchase additional shares. Accordingly, we expect to be a “controlled company” within the meaning of the corporate governance standards of Nasdaq. J&F Participações is beneficially owned by Messrs. José Batista Sobrinho, José Batista Júnior, Joesley Mendonça Batista and Wesley Mendonça Batista, or the Batista family, and is jointly controlled, pursuant to a shareholders’ agreement among the shareholders of J&F Participações, by Messrs. José Batista Sobrinho and José Batista Júnior. For more information about our corporate structure immediately following this offering, see “Summary — Our Corporate Structure.”

We are an “emerging growth company” under the U.S. federal securities laws as that term is used in the Jumpstart Our Business Startups Act of 2012 and will be subject to reduced public company disclosure and reporting requirements. Investing in our Class A common shares involves risks. See “Risk Factors” beginning on page 20 of this prospectus.

 

Per Class A common share

 

Total

Initial public offering price

 

US$

 

US$

Underwriting discounts and commissions(1)

 

US$

 

US$

Proceeds, before expenses, to us

 

US$

 

US$

____________

(1)      See “Underwriting” for a description of all compensation payable to the underwriters.

We have granted the underwriters an option for a period of 30 days from the date of this prospectus to purchase up to                additional Class A common shares to cover the underwriters’ option to purchase additional shares, if any, at the initial public offering price, less underwriting discounts and commissions.

Neither the U.S. Securities and Exchange Commission, or the SEC, nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the Class A common shares against payment in New York, New York on or about               , 2021.

Global Coordinators

BTG Pactual

 

Bradesco BBI

 

Santander

 

Barclays

The date of this prospectus is               , 2021.

 

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Table of Contents

table of contents

___________________

 

Page

Presentation of Financial and Other Information

 

viii

Cautionary Statement Regarding Forward-Looking Statements

 

xi

Summary

 

1

The Offering

 

15

Summary Financial and Other Information

 

17

Risk Factors

 

20

Use of Proceeds

 

53

Dividends and Dividend Policy

 

54

Capitalization

 

55

Dilution

 

56

Exchange Rates

 

58

Market Information

 

59

Selected Financial and Other Information

 

60

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

64

Industry Overview

 

84

Regulatory Overview

 

92

Business

 

100

Management

 

117

Principal Shareholders

 

122

Related Party Transactions

 

126

Description of Share Capital

 

132

Class A Common Shares Eligible for Future Sale

 

150

Taxation

 

151

Underwriting

 

156

Expenses of the Offering

 

165

Legal Matters

 

165

Experts

 

165

Enforceability of Civil Liabilities

 

166

Where You Can Find More Information

 

168

Explanatory Note to the Financial Statements

 

F-1

Index to Financial Statements

 

F-1

___________________

None of us, or the underwriters, or any of their respective agents, have authorized anyone to provide any information other than that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we may have referred you. None of us, or the underwriters, or any of their respective agents, take responsibility for, and can provide any assurance as to the reliability of, any other information that others may give you. None of us, or the underwriters, or any of their respective agents, have authorized any other person to provide you with different or additional information. None of us, or the underwriters, or any of their respective agents, are making an offer to sell the Class A common shares in any jurisdiction where the offer or sale is not permitted. This offering is being made in the United States and elsewhere solely on the basis of the information contained in this prospectus. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or any sale of the Class A common shares. Our business, financial condition, results of operations and prospects may have changed since the date on the front cover of this prospectus.

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For investors outside the United States: None of us, or the underwriters, or any of their respective agents, have done anything that would permit this offering or possession or distribution of this prospectus or any free writing prospectus we may provide to you in connection with this offering in any jurisdiction, other than the United States, where action for that purpose is required. Persons outside the United States who come into possession of this prospectus or any such free writing prospectus must inform themselves about, and observe any restrictions relating to, the offering of our Class A common shares and the distribution of this prospectus or any such free writing prospectus outside the United States and in their jurisdiction.

___________________

Unless otherwise indicated or the context otherwise requires, all references in this prospectus to: (1) “PicS” or the “Company,” “we,” “our,” “ours,” “us” or similar terms refer to PicS Ltd., a Cayman Islands exempted company with limited liability, together with its consolidated operating subsidiary, PicPay Brazil, assuming that our Corporate Reorganization (as defined below) had been completed as of the date of the applicable disclosure; and (2) “PicPay Brazil” are to PicPay Serviços S.A., a privately-held company (sociedade anômina fechada) incorporated in Brazil.

In addition, in this prospectus, except where otherwise indicated or where the context requires otherwise:

•        “AGR Capital” means AGR Capital SP, a private investment fund, organized within a segregated portfolio company in the Cayman Islands. Immediately following the consummation of this offering, AGR Capital will directly own         % of our Class A common shares. AGR Holdings B.V. owns 100% of the shares attributable to AGR Capital.

•        “AGR Holdings” means AGR Holdings B.V., a private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) incorporated under Dutch law. Mr. Aguinaldo Gomes Ramos Filho holds 90% of the total capital stock of AGR Holdings. J&F Participações holds the remaining 10% of the total capital stock of AGR Holdings. Mr. Aguinaldo Gomes Ramos Filho is a grandson of Mr. José Batista Sobrinho, a nephew of Messrs. José Batista Júnior, Joesley Mendonça Batista and Wesley Mendonça Batista, and a cousin of Mr. José Antonio Batista Costa.

•        “Articles of Association” means PicS’s amended and restated memorandum and articles of association that will be effective prior to the completion of this offering.

•        “Batista family” means Messrs. José Batista Sobrinho, José Batista Júnior, Joesley Mendonça Batista and Wesley Mendonça Batista. The Batista family beneficially owns all of the issued and outstanding capital stock of J&F Participações.

•        “Banco Original” means Banco Original S.A., a Brazilian financial institution duly authorized by the Brazilian Central Bank and wholly-owned subsidiary of J&F Participações.

•        “Belami Capital” means Belami Capital SP, a private investment fund, organized within a segregated portfolio company in the Cayman Islands. Immediately following the consummation of this offering, Belami Capital will directly own             % of our Class A common shares. Belami Holdings owns 100% of the shares attributable to Belami Capital.

•        “Belami Holdings” means Belami Holdings B.V., a private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) incorporated under Dutch law. Mr. Anderson Chamon, PicPay Brazil’s co-founder and its vice-president of technology and products, holds 80% of the total capital stock of Belami Holdings. Mr. José Antonio Batista Costa, our CEO, holds the remaining 20% of the total capital stock of Belami Holdings. For more information about Mr. José Antonio Batista Costa, see “Management.”

•        “Class A common shares” means Class A common shares of, par value US$0.000025 per Class A common share, whereby each Class A common share confers the right to one vote per share at the general meeting of shareholders.

•        “Class B common shares” means Class B common shares of PicS, par value US$0.000025 per Class B common share, whereby each Class B common share confers the right to ten votes per share at the general meeting of shareholders.

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•        “Corporate Reorganization” means the transaction or series of transactions that will take place prior to the completion of this offering pursuant to which the existing shareholders of PicPay Brazil will contribute all of their shares in PicPay Brazil to us. As a result of these transactions, PicPay Brazil will become our direct subsidiary. Until the contribution of PicPay Brazil shares to us, we will not have commenced operations and will have only nominal assets and liabilities and no material contingent liabilities or commitments. For more information, see “Presentation of Financial and Other Information — Corporate Events — Our Corporate Reorganization.”

•        “existing shareholders of PicPay Brazil” means the shareholders of PicPay Brazil at any given time. The existing shareholders of PicPay Brazil as of April 21, 2021 are J&F Participações, Messrs. José Antonio Batista Costa (our CEO) and Anderson Chamon (PicPay Brazil’s co-founder and its vice-president of technology and products). For more information, see “Summary—Recent Developments—PicPay Brazil Ownership Changes.”

•        “FIDC PicPay I” means Fundo de Investimentos em Direitos Creditórios Não-Padronizados PicPay I, a FIDC that began operating in May 2019 in order to facilitate our offering of installment payments to users. Currently, 100% of FIDC PicPay I’s senior quotas are held by Banco Original, and 100% of FIDC PicPay I’s subordinated quotas are held by PicPay Brazil.

•        “J&F International” means J&F International B.V., a private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) incorporated under Dutch law. Immediately following the consummation of this offering, J&F International will directly own 100% of our Class B common shares. J&F International is a wholly-owned subsidiary of J&F Participações.

•        “J&F Participações” means J&F Participações S.A., a corporation (sociedade anônima) incorporated under the laws of Brazil. As of April 21, 2021, J&F Participações holds 100% of PicPay Brazil’s common shares and 90.54% of PicPay Brazil’s preferred shares, representing 95.27% of PicPay Brazil’s total capital stock. All of the issued and outstanding capital stock of J&F Participações is beneficially owned by the Batista family. Mr. José Batista Sobrinho and JBJ Agropecuária Ltda. each individually own 25.000002% of the outstanding common shares of J&F Participações. Mr. José Batista Júnior owns 99.9% of the equity interests of JBJ Agropecuária Ltda. Messrs. Joesley Mendonça Batista and Wesley Mendonça Batista each individually own 24.999998% of the outstanding common shares and 50% of the outstanding preferred shares of J&F Participações. J&F Participações is jointly controlled, pursuant to a shareholders’ agreement among the shareholders of J&F Participações, by Mr. José Batista Sobrinho and JBJ Agropecuária Ltda.

•        “JAB Capital” means JAB Capital SP, a private investment fund, organized within a segregated portfolio company in the Cayman Islands. Immediately following the consummation of this offering, JAB Capital will directly own             % of our Class A common shares. JAB Holland owns 100% of the shares attributable to JAB Capital.

•        “JAB Holland” means JAB Holland B.V., a private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) incorporated under Dutch law. Mr. José Antonio Batista Costa, our CEO, holds 90% of the total capital stock of JAB Holland. For more information about Mr. José Antonio Batista Costa, see “Management.” Mr. Anderson Chamon, PicPay Brazil’s co-founder and its vice-president of technology and products, holds the remaining 10% of the total capital stock of JAB Holland.

Glossary of Technical Terms

The following is a glossary of certain industry and other technical terms used in this prospectus:

•        “ABECS” means the Brazilian Association of Credit Card Companies and Services (Associação Brasileira das Empresas de Cartões de Crédito e Serviços), a trade association that represents participants in the Brazil credit card market.

•        “active merchant” means a merchant inside our network that has received at least one payment in the last 12 months.

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•         “active social user” means a registered user who “likes,” follows or leaves comments on the account of another user on our platform during the preceding 12 month period.

•        “active transacting user” means a registered user who has made at least one financial transaction on our platform during the preceding 12 month period.

•        “active user” means a registered user who has opened our application at least once during the preceding 12 month period.

•         “acquirer” means a payment institution that, without managing payment accounts, provides the following services: (1) accreditation of receivers (usually merchants) for the acceptance of payment instruments issued by a payment institution or financial institution participating in the same payment scheme; and (2) participation in the settlement process of payment transactions as a creditor with respect to the card issuer and a debtor with respect to the accredited merchant, in accordance with the rules of the payment scheme. The acquirer receives the transaction details from the merchant’s terminal, passes them to the card issuer for authorization via the payment scheme, and completes the processing of the transaction. The acquirer arranges settlement of the transaction and credits the merchant’s bank account with the funds in accordance with its service agreement with the merchant. The acquirer also processes any chargebacks that may be received via the card issuer regarding consumer transactions with merchants. The relationship between the acquirer and the merchant is governed by an accreditation agreement, which contains clauses about operational transaction rules, payment of fees and tariffs, confidentiality, intellectual property, prevention of money laundering and combating the financing of terrorism, use of brand and securitization of receivables. Brazilian merchant acquirers include GetNet, Stone, Rede and Cielo.

•        “ANBIMA” means the Brazilian Financial and Capital Markets Association (Associação Brasileira dos Mercados Financeiro e de Capitais), a trade association of participants in the Brazilian financial market that, among other activities, publishes certain statistics regarding the Brazilian financial and capital markets.

•         “APIs” means application programming interfaces, a set of clearly defined methods of communication between different software components that enables developers and resellers to create applications that can easily connect and integrate with our platform.

•        “B2P” means business-to-person. We offer a B2P service through which merchants can pay or transfer money to our users.

•        boleto” (bank slips) means a printable document issued by merchants that is used to make payments in Brazil. Boletos can be used to pay bills for products or services, utilities or taxes. Each boleto refers to a specific merchant and customer transaction, and includes the merchant’s name, customer information, expiration date and total amount due, plus a serial number that identifies the account to be credited and a barcode to enable the document to be read and processed by a Brazilian ATM, as well as by the mobile apps of many Brazilian banks. A boleto can be paid in cash at a bank teller, at an ATM or by bank transfer. Our payment platform can be used by our users to pay boletos.

•        “Brazil” means the Federative Republic of Brazil.

•        “Brazilian government” means the federal government of Brazil.

•        “Brazilian real,” “Brazilian reais,” “real,” “reais” or “R$” means the Brazilian real, the official currency of Brazil.

•        “Brazilian Central Bank” means the Banco Central do Brasil.

•         “CAGR” means compound annual growth rate. Our historical growth rates do not guarantee future results, levels of activity, performance or achievements.

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•        “cardholder” means a holder (either an individual or an entity) for a credit, prepaid or debit card. The cardholder may use the card at any merchant accredited by an acquirer or sub-acquirer for the acceptance of that type of card.

•        “card brand” means the name of the payment scheme settlor that is printed on the issued branded credit, debit and/or prepaid cards (for example, Mastercard, American Express and Visa).

•        “card issuer” means a payment institution or a financial institution that acts as issuer of cards and administrator of prepaid/postpaid payment accounts or deposit accounts operated by such institutions in a certain payment scheme and that meets the brand qualification requirements to issue branded credit, debit and/or prepaid cards. Card issuers are also responsible for collecting amounts spent with branded credit, debit and/or prepaid cards from cardholders.

•        “cash-in” means to add funds to the balance of a digital wallet account from outside our platform via electronic funds transfer or boleto.

•        “cash-out” means to remove funds from a digital wallet account on our platform via electronic funds transfer or cash withdrawal.

•        “CDI rate” means the Brazilian interbank deposit (certificado de deposito interbancário) rate, which is an average of interbank overnight deposit interest rates in Brazil.

•        “chargeback” means a claim where the consumer requests a reversal of the transaction amount from the card issuer on the basis of a commercial claim (for example, if the goods are not delivered, or are delivered damaged), fraud or error.

•        “CMN” means the Brazilian National Monetary Council (Conselho Monetário Nacional).

•        “CNSEG” means the Brazilian Insurance Confederation (Confederação Nacional das Empresas de Seguros Gerais, Previdência Privada e Vida, Saúde Suplementar e Capitalização), a trade association for the insurance industry.

•        “Companies Act” means the Companies Act (as amended) of the Cayman Islands.

•         “cohort” means a selected group of users that we follow over time to analyze their behavior from different perspectives, such as retention and engagement.

•        “CVM” means the Brazilian Securities Commission (Comissão de Valores Mobiliários).

•         “Exchange Act” means the United States Securities Exchange Act of 1934.

•         “FIDC” means a Receivables Investment Fund (Fundo de Investimento em Direitos Creditórios), an investment fund legal structure established under Brazilian law designed specifically for investing in credit rights receivables. FIDCs (and quotas representing interests therein) are regulated by the rules and regulations of the CMN and the CVM; in particular Resolution No. 2,907/01 of the CMN, and CVM Instruction No. 356/01, as amended from time to time, including by CVM Instruction No. 489/11 and CVM Instruction No. 531/13.

•        “financial transaction” means any payment, transfer, cash-in or cash-out in our ecosystem. It includes, without limitation: (1) P2P, P2B and P2M payments, bill payment (including boleto and utility bills) and purchases at the PicPay Store or financial marketplace using our app or the PicPay Card; (2) money transfers between accounts; (3) any kind of cash-in, including via wire transfer from financial institutions or boletos; and (4) any kind of cash-out, including via wire transfer to other institutions or cash withdrawals.

•        “JOBS Act” means the Jumpstart Our Business Startups Act of 2012.

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•         “IBGE” means the Brazilian Central Bank, the Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística).

•        “interchange fee” means a fee paid to the card issuer for transactions established in the scope of a payment scheme.

•        “licensed merchant through partnerships with acquirers” means merchants that can receive payments through POS devices registered with our partner-acquirers. We have entered into agreements with the Brazilian merchant acquirers GetNet, Stone, Rede and Cielo.

•        “merchant” means any entity or organization that accepts electronic payment transactions for the payment of goods or services.

•        “merchant discount rate” or “MDR” means the fee or commission paid by merchants to acquirers or sub-acquirers for the service of capturing, processing, transmitting and settling transactions. The merchant discount rate is applied to the value of each cardholder’s transaction and includes the interchange fee.

•        “open platform” means a flexible platform that is open to be integrated to any external entity who complies with the platform’s terms of use.

•        “P2B” means person-to-business. We offer P2B payment solutions to our users. A P2B transaction occurs when a user pays a registered merchant.

•        “P2M” means person-to-machine. We offer P2M payment solutions to our users. A P2M transaction occurs when a user pays using a QR code generated by a POS device from an acquirer (currently GetNet, Stone, Rede and Cielo).

•        “P2P” means person-to-person. We offer P2P solutions to our users. A P2P transaction occurs when a user makes an electronic currency transfer to another person using our platform.

•        “payment institution” means a legal entity (instituição de pagamento) that participates in one or more payment schemes and is dedicated to executing, as its principal or ancillary activity, those payment services described in Article 6, item III, of Brazilian Federal Law No. 12,865/13 to cardholders or merchants, including those activities related to the provision of payment services. Specifically, based on current regulations, the Brazilian Central Bank has opted to narrow the definition of payment institutions as set out in Brazilian Federal Law No. 12,865/13 to include only those entities that can be classified into one of the following four categories: (1) issuer of electronic money (prepaid payment instruments); (2) issuer of postpaid payment instruments (e.g. credit cards); (3) acquirers; and (4) payment initiator service provider (PISP).

•        “payment scheme” means the collection of rules and procedures that govern payment services provided to the public, with direct access by its end users (i.e., payers and receivers). Such payment services must be accepted by more than one receiver in order to qualify as a payment scheme. A payment scheme is established by and operated by a payment scheme settlor.

•        “payment scheme settlor” means the entity responsible for the functioning of a payment scheme, for the associated card brand and for the authorization of card issuers and acquirers to participate in the payment scheme. Mastercard and Visa are major payment scheme settlors globally, including Brazil.

•        “PicPay Card” means our co-branded combo debit and credit card.

•        “PIX” means the instant payments system launched by the Brazilian Central Bank in 2020, enabling users to make and receive instant payments and transfer funds instantaneously at any time.

•        “POS” means a point of sale (merchant) where a transaction is completed.

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•        “POS device” means a device used to execute a card transaction, commonly known in Brazil as “maquininhas.” POS devices registered with our partner-acquires may also receive payments on our app via QR code. As of January 2021, we have entered into partnerships with the acquirers GetNet, Stone, Rede and Cielo.

•        “QR code” means Quick Response Code, which is an image that is able to store information, analogous to a two-dimensional bar code.

•        “registered merchant” means a merchant that creates an account with us to receive payments with QR code.

•        “registered user” means an individual who downloads our application and creates an account with us.

•        “Securities Act” means the United States Securities Act of 1933, as amended.

•        “SELIC” means the interest rate established by the Brazilian Special Clearance and Custody System (Sistema Especial de Liquidação e Custódia).

•        “sub-acquirer” means an entity that: (1) provides the service of accreditation of receivers (usually merchants) for the acceptance of payment instruments issued by a payment institution or financial institution participating in the same payment scheme; and (2) participates in the settlement process of payment transactions as a creditor with respect to the acquirer and a debtor with respect to the accredited merchant, in accordance with the rules of the payment scheme. Sub-acquirers act as intermediaries between acquirers and merchants, and also can be a payment institution which manages payment accounts.

•        “super app” means a digital marketplace of services and offerings, delivered via in-house technology and through third party integrations.

•        “total payment volume” or “TPV” means the aggregate amount of payments, outbound transfers (sending money) and cash-out, net of reversals, successfully completed on our platform.

•        “U.S. dollar,” “U.S. dollars” or “US$” means U.S. dollars, the official currency of the United States.

•        “wallet balance” means the balance of the payment account held by users and some merchants that have a payment account on our platform.

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Presentation of Financial and Other Information

Financial Statements

PicS, the company whose Class A common shares are being offered in this prospectus, was incorporated on January 18, 2021, as a Cayman Islands exempted company with limited liability duly registered with the Cayman Islands Registrar of Companies. Until the contribution of PicPay Brazil shares to it in connection with our Corporate Reorganization, PicS will not have commenced operations and will have only nominal assets and liabilities and no material contingent liabilities or commitments.

We present in this prospectus the audited financial statements of PicPay Brazil as of and for the years ended December 31, 2020 and 2019. These audited financial statements were prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or the IASB, and audited in accordance with auditing standards of the Public Company Accounting Oversight Board.

PicPay Brazil maintains its books and records in Brazilian reais, the presentation currency for its financial statements and also its functional currency. Unless otherwise noted, PicPay Brazil’s financial information presented herein as of and for the years ended December 31, 2020 and 2019 is stated in Brazilian reais, its reporting currency. The financial information of PicPay Brazil contained in this prospectus is derived from PicPay Brazil’s audited financial statements as of and for the years ended December 31, 2020 and 2019, together with the notes thereto. All references herein to “our audited financial statements” are to PicPay Brazil’s financial statements, including the notes thereto, included elsewhere in this prospectus.

This financial information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited financial statements, including the notes thereto, included in this prospectus.

Following this offering, PicPay will begin reporting consolidated financial information to shareholders, and PicPay Brazil will continue to present financial statements in accordance with Brazilian Federal Law No. 6,404/76.

PicPay Brazil’s and our fiscal year ends on December 31. References in this prospectus to a fiscal year, such as “fiscal year 2020,” relate to our fiscal year ended on December 31 of that calendar year.

Corporate Events

Our Incorporation

We are a Cayman Islands exempted company incorporated with limited liability on January 18, 2021 for purposes of effectuating our initial public offering.

Our Corporate Reorganization

Prior to the completion of this offering, the existing shareholders of PicPay Brazil will contribute all of their shares in PicPay Brazil to us, in a transaction or series of transactions that we refer to as our “Corporate Reorganization.” As a result of our Corporate Reorganization, PicPay Brazil will become our direct subsidiary. Until the contribution of PicPay Brazil shares to us, we will not have commenced operations and will have only nominal assets and liabilities and no material contingent liabilities or commitments.

After accounting for the        new Class A common shares that will be issued and sold by us in this offering (assuming no exercise of the underwriters’ option to purchase additional shares), we will have a total of              common shares issued and outstanding immediately following this offering, consisting of               Class A common shares and        Class B common shares. J&F International will directly own 100% of our Class B common shares, which will represent approximately        % of the combined voting power of our outstanding share capital following this offering, assuming no exercise of the underwriters’ option to purchase additional shares. J&F International is a wholly-owned subsidiary of J&F Participações. Accordingly J&F Participações will control our company. All of the issued and outstanding capital stock of J&F Participações is beneficially owned by the Batista family and is jointly controlled, pursuant to a shareholders’ agreement among the shareholders of J&F Participações, by Messrs. José Batista Sobrinho and José Batista Júnior. For more information

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about the shareholders’ agreement of J&F Participações, see “Principal Shareholders — Shareholders’ Agreement of J&F Participações.” For more information about our corporate structure after giving effect to our Corporate Reorganization and this offering (assuming no exercise of the underwriters’ option to purchase additional shares), see “Summary — Our Corporate Structure.”

Financial Information in U.S. Dollars

Solely for the convenience of the reader, we have translated some of the real amounts included in this prospectus from reais into U.S. dollars. You should not construe these translations as representations by us that the amounts actually represent these U.S. dollar amounts or could be converted into U.S. dollars at the rates indicated or any other exchange rate. Unless otherwise indicated, we have translated real amounts into U.S. dollars using a rate of R$5.1967 to US$1.00, the commercial selling rate for U.S. dollars as of December 31, 2020 as reported by the Brazilian Central Bank. See “Exchange Rates” for more detailed information regarding translation of reais into U.S. dollars and for historical exchange rates for the Brazilian real. See “Exchange Rates” for more detailed information regarding the translation of reais into U.S. dollars and for historical exchange rates for the Brazilian real.

Key Performance Indicators

In connection with our management’s analysis of our ongoing business operations, including comparing our performance with that of our competitors, our management uses certain indicators to measure our performance, including our: (1) number of registered users; (2) number of active users; (3) number of active transacting users; (4) aggregate wallet balance and number of users with a wallet balance; and (5) total payment volume (TPV). For more information about our key performance indicators, see “Summary Financial and Other Information — Operating Data” and “Selected Financial and Other Information — Operating Data.”

Registered Users

We define a registered user as an individual who downloads our application and creates an account with us. Our management uses registered user data to gauge the use of our super app as a share of our potential user base: namely, users of smartphones in Brazil.

Active Users

We define an active user as a registered user who has opened our application at least once during the preceding 12-month period. Our management uses active user data to measure user engagement. Active users have not necessarily engaged in any financial transactions. For example, active users may have simply viewed their account balances or opened our application.

Active Transacting Users

We define an active transacting user as a registered user who has made at least one financial transaction on our platform during the preceding 12 month period. Our management uses active transacting user data to measure user engagement among users making financial transactions using our application.

Wallet Balance and Users with a Wallet Balance

We define wallet balance as the balance of the payment account held by users and some merchants that have a payment account on our platform. Our management uses wallet balance data to identify users who maintain a balance in their accounts. These users earn interest over those balances and are able to conduct transactions with the greatest ease.

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Total Payment Volume (TPV)

We define total payment volume, or TPV, as the aggregate amount of payments, outbound transfers (sending money) and cash-out, net of reversals, successfully completed on our platform. TPV represents the total value of sales that pass through our ecosystem. We generate revenue from certain payment transactions as a percentage of TPV.

For high-growth companies, such as PicPay Brazil, historical results may not provide the most accurate reflection of potential growth trends. Accordingly, we have chosen to supplement our actual historical TPV disclosure for 2020 with a 2020 TPV run rate, which we define as 12 times our December 2020 TPV, based on the last month of 2020.

Market Share and Other Information

This prospectus contains data related to economic conditions in the market in which we operate. The information contained in this prospectus concerning economic conditions is based on publicly available information from third-party sources that we believe to be reasonable. Market data and certain industry forecast data used in this prospectus were obtained from internal reports and studies, where appropriate, as well as estimates, market research, publicly available information (including information available from the United States Securities and Exchange Commission website) and industry publications. We are responsible for all of the disclosure in this prospectus, and we obtained the information included in this prospectus relating to the industry in which we operate, as well as the estimates concerning market shares, through internal research, public information and publications on the industry prepared by official public sources and trade associations, such as IBGE, ANBIMA, ABECS and CNSEG, as well as private sources, such as FGV (Fundação Getúlio Vargas), Statista, Bloomberg, McKinsey & Company, Instituto Locomotiva, Euromonitor and Emarketer, among others.

Industry publications, governmental publications and other market sources, including those referred to above, generally state that the information they include has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. In addition, the data that we compile internally and our estimates have not been verified by an independent source. Except as disclosed in this prospectus, none of the publications, reports or other published industry sources referred to in this prospectus were commissioned by us or prepared at our request. Except as disclosed in this prospectus, we have not sought or obtained the consent of any of these sources to include such market data in this prospectus.

Brands

We are party to an agreement that gives us the right to use, and we intend to acquire prior to the completion of this offering, the trademarks, service marks and trade names that we use in connection with the operation of our business, including our corporate name, logos and website names. For more information, see “Related Party Transactions — Agreements with J&F Participações — Trademark Agreements.” Other trademarks, service marks and trade names appearing in this prospectus are the property of their respective owners. Solely for convenience, some of the trademarks, service marks and trade names referred to in this prospectus are listed without the ® and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights to our trademarks, service marks and trade names.

Rounding

We have made rounding adjustments to some of the figures included in this prospectus. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.

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Cautionary Statement Regarding Forward-Looking Statements

This prospectus contains statements that constitute forward-looking statements. Many of the forward-looking statements contained in this prospectus can be identified by the use of forward-looking words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “may”, “predict”, “continue”, “estimate” and “potential,” among others.

Forward-looking statements appear in a number of places in this prospectus and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to, those identified under the section entitled “Risk Factors” in this prospectus. These risks and uncertainties include factors relating to:

•        our ability to compete and conduct our business in the future;

•        our ability to grow our user base and maintain active users;

•        our ability to implement our business strategy;

•        our ability to adapt to technological changes in our industry;

•        our ability to maintain, protect and enhance our brand and intellectual property;

•        the inherent risks related to the digital payments market, such as the interruption, failure or breach of our computer or information technology systems;

•        the availability of qualified personnel and the ability to retain such personnel;

•        changes in government regulations applicable to our industry in Brazil;

•        government interventions in our industry that affect the economic or tax regime, the regulatory framework applicable to our business;

•        any increases in our costs, including, but not limited to: (1) operating and maintenance costs; (2) regulatory and environmental costs; and (3) social contribution charges, income tax and other taxes;

•        our ability to efficiently predict, and react to, temporary or long-lasting changes in consumer behavior resulting from the COVID-19 pandemic, including after the outbreak has been sufficiently controlled;

•        our ability to timely and efficiently implement any measures that are necessary to combat or reduce the impacts of the COVID-19 pandemic on our business, results of operations, cash flow, prospects, liquidity and financial condition;

•        global and Brazilian economic conditions in general and the risks associated with the COVID-19 pandemic;

•        significant changes in our customers’ behavior as a result of the mitigation, control and/or end of the COVID-19 pandemic;

•        the interests of our controlling shareholder(s);

•        general economic, financial, political, demographic and business conditions in Brazil, as well as any other countries we may serve in the future and their impact on our business;

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•        fluctuations in interest, inflation and exchange rates in Brazil and any other countries we may serve in the future;

•        other factors that may affect our financial condition, liquidity and results of operations; and

•        other risk factors discussed under “Risk Factors.”

Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events.

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Summary

This summary highlights information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before making an investment decision, and we urge you to read this entire prospectus carefully, including the sections “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as our audited financial statements included elsewhere in this prospectus, before deciding to invest in our Class A common shares.

Our Mission

Our primary mission is to make life easier by reinventing the way people deal with money, shop and communicate. We offer our customers an easier, frictionless and less bureaucratic experience, ensuring they capture the most of what really matters: a seamless user experience. We want to transform the way people and businesses interact, transact and advertise in an intelligent, connected and simple way, leveraging on the large disruption potential of the payments and financial services sector.

Our Company

We are the largest Brazilian super app in terms of number of registered users as of December 31, 2020, based on our comparison of other Brazilian participants with publicly-available information. We offer a technology-enabled multipurpose ecosystem for daily needs, providing financial, communication and consumer services to more than 38.8 million registered users as of December 31, 2020. We operate as an open platform empowered with social features that connect our users, affiliated merchants and commercial partners. From December 31, 2018 to December 31, 2020, our active user base grew at a CAGR of 231%. As of December 31, 2020, we had 28.4 million active users, 1.2 million active merchants and other licensed merchants through partnerships with the Brazilian merchant acquirers GetNet, Stone, Rede and Cielo.

Our five key strategic pillars are: social, digital wallet, financial marketplace, the PicPay Store and ads. The graphic below illustrates each of these strategic pillars, including as an example, certain well-known providers that provide similar services, although not all of these providers operate in Brazil.

•        Social:    Connecting people has been a part of our DNA since our inception in 2012. In 2013, we launched our P2P social payments platform. Since then, we have added other social features to our platform, including profiles and social feeds. We expect to launch our direct messaging service in the first half of 2021, with group chats and voice and video calls to follow later in the year. Today, our social platform is fully integrated with our financial services offerings. We believe this integration creates a network effect and improves the performance of our revenue streams. For example, in 2020, the average spend per user on our platform was 53% higher among active social users (defined as a registered user

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who “likes,” follows or leaves comments on the account of another user on our platform during the preceding 12 month period) as compared to other users. Also, in 2020, active social users engaged in twice the number of transactions per user and received 3.7x more payments using our platform than other users. Moreover, active social users between the second quarter of 2019 and the first quarter of 2020 were 2.4x more likely than other users to continue using our platform after three quarters. We believe that our social features will help drive our future growth.

•        Digital Wallet:    Our most mature offering, digital wallet, enables users to perform a wide range of financial transactions. Users can add funds to the balance of their accounts in different ways: electronic funds transfers from their accounts held with other financial institutions, including via the Brazilian Central Bank’s recently-developed instant payment system, PIX, via boleto, by receiving funds via P2P payments or contracting loans. Users also earn interest on their wallet balances. Users can also onboard any credit card to make electronic transfers and payments. We believe we pioneered the use of QR code in 2013 to enable instant payment transfers between people in Brazil. The implementation of PIX has also been favorable for our platform, including due to: (1) higher engagement, as users who cash in through PIX spent 2x more and perform 2.3x more transactions than other users in December 2020; and (2) cash-ins that are seamless and free of charge. We strive to provide a complete and open payment ecosystem that allows people and merchants to send, transfer, receive and manage their own money in simple and innovative ways, including P2P, P2B and P2M transfers, and we charge fees in connection with certain payment transactions and fund transfers carried out by our users through our platform. We believe that our commercial capillarity, as evidenced by our more than 38.8 million registered users and 1.2 million active merchants and other licensed merchants through partnerships as of December 31, 2020, and the increased payment density within our digital wallet positions our solution as an increasingly attractive payment channel when compared to traditional payment processors.

•        Financial Marketplace:    We offer a marketplace for third-party financial services with integrated experiences for individuals and businesses, including the PicPay Card and loans. In 2021, we also expect to offer additional products such as P2P lending, insurance and investments. We focus only on the distribution of these services, without credit or underwriting risk. We benefit from an Artificial Intelligence-driven model and intense use of machine learning to provide more accurate offerings with a personalized approach targeted at users’ needs. We also generate user credit scores based on a proprietary algorithm. We receive commissions from our partners in connection with the financial services that are purchased on our platform. As of December 31, 2020, approximately 2 million PicPay Cards had been issued. In December 2020, users with the PicPay Card spent on average 4.8x more on our app than other users who did not have the PicPay Card. In addition, among active transacting users, retention in the third month after first use was 95% higher among PicPay Card users than among other users, considering cohorts activated in the first nine months of 2020 (for example, users activated in January who were still active in April).

•        PicPay Store:    The PicPay Store is an open platform that allows businesses to create customized mini apps to connect their products, services and experiences to millions of PicPay users. These products and services include: (1) digital goods, such as in-game credits, cellular phone recharge credits (top-ups) and transportation tickets; and (2) physical goods, such as food delivery. We believe that the PicPay Store’s open platform will allow us to scale merchant partner integrations to faster serve a wide range of market segments. We earn commissions from the sale of third-party goods through the PicPay Store. In 2020, our users completed approximately 24.8 million transactions on the PicPay Store.

•        Ads:    We plan to offer ads to allow merchants and brands to reach audiences based on user behavior and purchase history in order to drive actions such as shopping, watching and sharing content. We plan to use Artificial Intelligence to create recommendation models to suggest products, offers and content on user interfaces. Our ads content is expected to include promoted recommendations and promoted branded content created by our partners, advertiser funded rewards, such as discounts, cashbacks and coupons integrated with user wallets, and monetized interactions, in which audiences are given financial incentives to watch, click or share promoted branded content. We intend to monetize this business by charging impression and conversion fees. We currently expect to display ads on our application by the end of 2021.

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User Base Growth

The graphs below set forth our user base growth from December 31, 2018 to December 31, 2020:

Our Technology

Our application brings together an integrated suite of advanced technologies designed to provide differentiated capabilities and seamless client commerce experiences in a more secure, all-in-one environment. Our platform was developed to operate in a completely digital environment and enables us to develop, host, and deploy our solutions, conduct a broad range of transactions seamlessly across in-store, online and mobile channels and optimize our client support functions – all in a digital, integrated and holistic manner. We believe that our platform is agile, reliable, and scalable with fast processing speeds and a broad range of capabilities that can be maintained and expanded relatively easily and cost-effectively. The advanced nature and flexibility of our platform enables us to provide several technologies and benefits. In December 2020, our technology personnel accounted for 65% of our payroll.

Our Competitive Strengths

We expect that a number of our competitive advantages will continue to contribute to our growth, leveraging on our broad product offering and our 38.8 million registered users as of December 31, 2020. We believe that the key to our success is based on user experience (one-stop shop), network effect and our open platform approach to partners and technologies, among others, as described below.

One-stop shop application that addresses daily financial, shopping and communication needs of our users

We provide an application that is designed to fulfill the daily financial, shopping and communication needs of our users, connecting them to each other, as well as merchants and participants in the Brazilian financial sector, including banks, through what we believe is a simple, intuitive and connected platform that leverages social features and user experience.

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We believe that the one-stop shop capabilities of our application enable us to position ourselves in all stages of the daily life of our users, boosting customer interaction and engagement while improving user experience. Set forth below is an illustration of a user’s potential daily interactions through our platform:

Network effect at the core of our growth

We believe that network effect (i.e., increased perceived value in our goods and services as more people use our platform) is the main growth engine of our platform and one of the most important pillars of our operations. We believe that it allows us to materially expand our user base at an accelerated pace with low costs. Network effect is at the center of the decision-making process on several fronts of our business, including product development, geographic expansion and technology development. We believe the network effect we are able to generate enables us to quickly scale our operations and will allow us to maintain a leading position among super apps in Brazil.

Our business model is designed to reinforce network effect as users interact and transact through our platform. Several social features of our platform, such as P2P transactions, including gift sending, and interaction feeds, were designed to strengthen network effect. Similarly, we expect that several features that we expect to launch in the near future will further strengthen the network effect of our ecosystem, including:

•        Bill splitting among several users;

•        Open API and PicPay Store open software development kit (opening of the PicPay Store platform to retailers and third-party developers);

•        Audio and video chat;

•        Cash-in and cash-out at retail cashiers;

•        PicPay Store post-sales communications integrated to direct messaging; and

•        P2P lending: one-on-one and collective (multiple investors to multiple borrowers).

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The flywheel below illustrates the network effect acting on our ecosystem, whereby: (1) more users increase geographic density, creating more use cases and stimulating more users; (2) geographic density encourages more merchants to join our platform, creating more use cases and stimulating more users; and (3) more users also attract more third-party offers to the PicPay Store, creating more use cases and stimulating more users.

We have experienced network effect in the Brazilian State of Espírito Santo, where we were founded in 2012. Espírito Santo is our most mature market. In December 2020, users in Espírito Santo completed 3.5x more monthly transactions on our app and generated 2.2x more revenue per user on our app than users of our app in the rest of Brazil combined.

Open technology platform and extensive track record of execution

We believe that an effective and sustainable technology culture is part of our DNA. We combine multiple pillars that sustain our technology backbone, including cloud native software culture, obsession with user experience, highly scalable open platforms for developers, agile development, focus on research and experimentation, fast delivery, organization agility, and data- and Artificial Intelligence-driven solutions.

In addition to our technology backbone, our people are among our greatest assets and one of our priorities. They are one of the main drivers that sustain the pace of our development. In December 2020, our technology personnel accounted for 65% of our payroll, and we have more than 900 technology and technology-related employees working on an average of 700 software deliveries per month in the fourth quarter of 2020. Our software engineering employee base grew from 35 to more than 700 over the last two years. Additionally, in 2019 and 2020, we delivered a new version of our super app once per week on average.

The growth of our user base is supported by an extensive track-record of product development, with more than 30 significant products and/or features launched in 2020. We conduct this process with a strong pioneering spirit, focus on network effect generation and under a tailor-made approach considering the everyday needs of our clients.

Household name in Brazil

We believe we are a household name in Brazil. Our brand was recognized by 68% of Brazilian adults surveyed by Google/Kyra/MosaicLab in August 2020. We also ranked first in the “Top of Mind” survey of payment apps and digital wallets in Brazil conducted by Ginger between December 2020 and January 2021. When asked which brand of payment app or digital wallet came to mind, approximately 26% of respondents in this survey named our application, placing us ahead of PayPal (25%) and MercadoPago (7%), among others, In addition, we were named the “Best Super App,” and “Best Fintech” in Brazil by a popular vote conducted by IBest in 2020.

Efficient unitary economics

We believe we have achieved healthy payback dynamics together with a solid expansion of our user base. As the scale of our platform and network effect has increased, our customer acquisition costs have decreased over time. Moreover, for active user cohorts, we have observed increasing transaction margin per user over time (measured as transaction revenue per user minus MDR per user).

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Corporate Governance

The board of directors of PicS will consist of a majority of independent members. In addition, we have a seasoned management team that includes experienced professionals in the fields of technology and financial services. Key executives include José Antonio Batista Costa (our CEO), Anderson Chamon (PicPay Brazil’s co-founder and its vice-president of technology and products), and Eduardo Chedid (PicPay Brazil’s vice-president of financial services and former CEO of Elo, a Brazilian payment scheme settlor).

PicPay Brazil’s management team is supported by a governance structure, consisting of executive committees, including risk, compliance, ethics, anti-money laundering, data security and privacy committees. Additionally, PicPay Brazil’s management has approved a broad set of policies that govern its operations, such as a code of conduct, business continuity plan, anti-bribery, audit, compliance, community and culture, anti-money laundering, risks and internal controls, among others.

People and Culture

We aim to achieve our business goals while adhering to our seven core values: humility, determination, availability, ownership, simplicity, sincerity and discipline.

We have a rapid hiring process to sustain business growth with quality supported by a diverse team to achieve high performance. Our overall headcount grew approximately 10x from December 2018 to December 2020, reaching 1,846 employees as of December 31, 2020, while our tech-focused headcount grew 22x during the same period. We also have a performance evaluation process based on our values, including a culture evaluation committee as part of our recruitment process.

We are the highest ranked Brazilian technology company for employee satisfaction, according to a survey of former and current employees conducted by Glassdoor in November 2020. Our net employee net promoter score of 93% ranked ahead of Loggi (92%), iFood (91%), PagSeguro (86%), Nubank (85%), Stone (75%) and C6 Bank (73%).

Our Growth Strategies

Our primary growth strategies are:

Scale our user base

As discussed above and illustrated by our operations in Espírito Santo, our most mature market, the PicPay flywheel (our network effect) accelerates with a high-density user base. As such, our strategy to scale our user base nationally and regionally includes marketing and sales initiatives targeting users and merchants in high density urban centers.

Increase product offerings and penetration

By adding new products and services to our platform, we bring more usage with product depth and our app becomes part of our users’ daily routine. In 2021, we expect to launch several features on our platform, including P2P lending, insurance, investments, bill payment scheduling, direct messaging and PicPay Store offerings through user feeds.

Grow our super app

We believe that our ecosystem of lifestyle services is the glue between our users and providers. We intend to accelerate growth in our network and expand our portfolio focusing on new customer-paid products and services and merchant-paid platform usage. We also plan to offer ads on our app to allow merchants and brands to reach audiences and allow users to have access to additional promotions and discounts.

Invest in M&A

We intend to accelerate our growth with an M&A strategy that includes targets that will expand our product portfolio, improve our competencies and increase our presence along our value chain or shorten our path to new markets.

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Environmental, Social and Governance (ESG)

We are committed to environmental, social and governance (ESG) matters, as illustrated below:

•        Environmental:    We are in the process of installing photovoltaic solar panels on the roof of our corporate headquarters in order to boost our use of renewable and clean energy. We intend to run 50% of our office with clean energy by June 2021. We also offer a feature on our app through which users can donate funds to NGOs, such as Greenpeace Brazil.

•        Social:    We offer a feature on our app through which users can donate funds to various organizations and charities, including 147 NGOs. For example, from March 2020 to June 2020, through our donation feature, our users provided more than R$8.4 million in economic assistance to individuals affected by the COVID-19 pandemic. We were one of the key platforms that enabled distribution of the “coronavoucher,” a Brazilian government program that supported more than 36 million families and distributed more than R$300 billion in economic assistance. We are also involved in education initiatives, such as Tomorrow’s PicPay, an educational program for socially disadvantaged children that we established in 2017, and our partnership with the Germinare Institute, a nonprofit educational institution founded by J&F in 2009. Our diversity initiatives include a goal to increase gender diversity in leadership to 40%.

•        Governance:    Our corporate governance initiatives include anti-money laundering, data security and data protection and non-discrimination policies and diversity and inclusion initiatives.

Our History

We were founded in 2012 in the city of Vitória, the capital of the Brazilian State of Espírito Santo, by three seasoned entrepreneurs who had the goal of making people’s lives easier. We started by democratizing financial services in Brazil, connecting people who needed to transfer money, offering 24x7 P2P and QR Code payment in a mobile end-to-end experience.

We have grown to become the largest super app in Brazil in terms of number of registered users as of December 31, 2020, based on our comparison of other Brazilian participants with publicly-available information (i.e. Nubank, Banco Inter, Meliuz and C6). We believe that the growth of our user base and user engagement in our ecosystem demonstrates the scalability of our business model and has revealed a great opportunity to generate more value for these users, adding new experiences that are designed to satisfy a user’s daily needs, whether providing for social interaction between people around their payments or allowing for purchases of products and services in a broad e-commerce marketplace on our app.

Recent Developments

Capital Increases

On January 29, 2021, the shareholders of PicPay Brazil approved a capital increase in the amount of R$129.5 million, through the issuance of 153,842 shares (76,921 common shares and 76,921 preferred shares). This capital increase is subject to approval by the Brazilian Central Bank.

On March 31, 2021, the shareholders of PicPay Brazil approved a capital increase in the amount of R$47.7 million, through the issuance of 75,576 shares (37,788 common shares and 37,788 preferred shares). This capital increase is subject to approval by the Brazilian Central Bank.

For more information, see “Capitalization.”

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PicPay Brazil Ownership Changes

The following changes in share ownership of PicPay Brazil took place between February 2021 and March 2021.

In February 2021, J&F Participações purchased:

•        134,793 common shares of PicPay Brazil from Banco Original, representing 100% of the shares of PicPay Brazil held by Banco Original; and

•        130,610 common shares and 271,095 preferred shares of PicPay Brazil from Mr. José Batista Sobrinho, representing 100% of the shares of PicPay Brazil held by Mr. José Batista Sobrinho.

As a result of these transactions, J&F Participações became the sole shareholder of PicPay Brazil.

In March 2021, J&F Participações sold:

•        8,980 preferred shares of PicPay Brazil, representing 1.4% of the total capital stock of PicPay Brazil, to Mr. José Antonio Batista Costa, our CEO. These shares are subject to a lock-up period of up to five years, except that they may be transferred to us in connection with the Corporate Reorganization, in which case the Class A common shares that are issued pursuant to the Corporate Reorganization will be subject to the lock-up periods; and

•        21,360 preferred shares of PicPay Brazil, representing 3.33% of the total capital stock of PicPay Brazil, to Mr. Anderson Chamon, PicPay Brazil’s co-founder and its vice-president of technology and products. These shares are subject to lock-up period of up to 15 years, except that they may be transferred to us in connection with the Corporate Reorganization, in which case the Class A common shares that are issued pursuant to the Corporate Reorganization will be subject to the lock-up periods. In addition, Mr. Chamon is required to remain employed by and/or serve on the board of directors of PicPay Brazil or one of its affiliates for a period of 15 years. If Mr. Chamon terminates his employment with us prior to the end of the lock-up period, J&F Participações may repurchase such shares for the purchase price.

The following chart reflects the corporate structure of PicPay Brazil following the transactions described above. The following chart also reflects the corporate structure of PicPay Brazil immediately the prior to the Corporate Reorganization and the consummation of this offering.

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(1)      All of the issued and outstanding capital stock of J&F Participações is beneficially owned by the Batista family. J&F Participações is jointly controlled, pursuant to a shareholders’ agreement among the shareholders of J&F

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Participações, by Messrs. José Batista Sobrinho and José Batista Júnior (the latter through JBJ Agropecuária Ltda.). For more information about the shareholders’ agreement of J&F Participações, see “Principal Shareholders — Shareholders’ Agreement of J&F Participações.”

(2)      Mr. Anderson Chamon is PicPay Brazil’s co-founder and its vice-president of technology and products.

(3)      Mr. José Antonio Batista Costa is our CEO. He is the grandson of Mr. José Batista Sobrinho and a nephew of Messrs. José Batista Júnior, Joesley Mendonça Batista and Wesley Mendonça Batista. For more information about Mr. José Antonio Batista Costa, see “Management.”

Acquisition of FIDC PicPay I Subordinated Quotas

On February 23, 2021, Banco Original’s quotas held in FIDC PicPay I were converted into 1,023,000,000 senior quotas, and FIDC PicPay I issued 113,668,226 subordinated quotas to PicPay Brazil in consideration for R$97.8 million (US$18.8 million as of December 31, 2020), which amount has been paid in full. The senior quotas accrue a remuneration of CDI + 3% per annum, and they will be fully redeemed at the maturity date in February 2024. As sole holder of the subordinated quotas, Picpay Brazil is entitled to the full residual value of FIDC Picpay I, if any, and thus PicPay Brazil has the rights to FIDC PicPay I’s variable returns. FIDC PicPay I has a term of 20 years. As of March 31, 2021, our obligations to FIDC quota holders are expected to exceed approximately R$1.1 billion, which relates to a corresponding increase in trade receivables.

Preliminary Results for First Quarter of 2021

Our financial and operating results for the three months ended March 31, 2021 are not yet finalized. The following information reflects our preliminary results for this period:

•        Total revenue and income for the three months ended March 31, 2021 is expected to be between R$140 million and R$150 million, compared with R$29 million for the three months ended March 31, 2020, representing a period over period growth of between 382.8% and 417.2%, respectively.

•        Gross margin for the three months ended March 31, 2021 is expected to be between 50% and 55%, compared with 29% for the three months ended March 31, 2020. We define gross margin as gross profit (total revenue and income minus cost of sales and services) divided by total revenue and income.

•        Loss for the period for the three months ended March 31, 2021 is expected to be between R$400 million and R$410 million, compared with R$59 million for the three months ended March 31, 2020, representing a period over period growth of between 586.4% and 594.9%, respectively, primarily due to an increase in selling expenses, including increases in marketing expenses and cashback promotional programs, which are in line with our growth strategy. We expect our costs of sales and services and expenses, particularly selling (including marketing) and administrative expenses, to continue to increase significantly during 2021 in line with our strategy to grow our network and expand our portfolio and together with our related marketing, promotional and discount campaigns.

•        Financial liabilities associated with third party funds is expected to exceed approximately R$2.6 billion as of March 31, 2021, compared with R$1.3 billion as of December 31, 2021. These third-party funds relate to funds that our growing base of users have in their wallets, which amounts we invest in financial instruments on an ongoing basis.

•        TPV for the three months ended March 31, 2021 is expected to be approximately R$11.6 billion, compared with R$3.7 billion for the three months ended March 31, 2020, representing a period over period growth of 213.5%. Our TPV run rate (defined as 12 times our March 2021 TPV of approximately R$4.7 billion) was approximately R$57.5 billion. TPV refers to the aggregate amount of payments, outbound transfers (sending money) and cash-out, net of reversals, successfully completed on our platform.

•        Number of registered users (defined as users who download our application and create an account with us) is expected to total approximately 49.9 million as of March 31, 2021, compared with 38.8 million as of December 31, 2020, representing a growth of 28.6% during the first quarter of 2021.

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•        Number of active users (defined as users who have opened our application at least once during the preceding 12 months) is expected to total approximately 36.6 million as of March 31, 2021, compared with 28.4 million as of December 31, 2020, representing a growth of 28.9% during the first quarter of 2021.

•        Number of active transacting users (defined as users who have made at least one financial transaction on our platform during the preceding 12 months) is expected to total approximately 23.2 million as of March 31, 2021, compared with 16.2 million as of December 31, 2020, representing a growth of 43.2% during the first quarter of 2021.

•        Number of users with a wallet balance is expected to total approximately 11.9 million as of March 31, 2021, compared with 8.3 million as of December 31, 2020, representing a growth of 43.4% during the first quarter of 2021.

•        Users’ aggregate wallet balance is expected to total approximately R$2.537 billion as of March 31, 2021, compared with R$1.163 billion as of December 31, 2020, representing a growth of 118.1% during the first quarter of 2021.

•        Number of active merchants (defined as a merchant inside our network that has received at least one payment in the last 12 months) is expected to total approximately 1.3 million as of March 31, 2021, compared with 1.2 million as of December 31, 2020, representing a growth of 8.3% during the first quarter of 2021.

Cautionary Statement Regarding Preliminary Results

The results for the three months ended March 31, 2021 are preliminary, unaudited and subject to completion, reflect our management’s current views. While these preliminary results have been prepared in good faith and based on information available at the time of preparation, no assurance can be made that actual results will not change as a result of our management’s review of results and other factors. These preliminary results are subject to finalization and closing of our accounting books and records (which have yet to be performed) and should not be viewed as a substitute for full quarterly financial statements prepared in accordance with IFRS. These preliminary results depend on several factors, including weaknesses in our internal controls and financial reporting process (as described under “Risk Factors”) and our ability to timely and accurately report our financial results. In addition, the estimates and assumptions underlying these preliminary results include, among other things, economic, competitive, regulatory and financial market conditions and business decisions that may not be accurately reflected and that are inherently subject to significant uncertainties and contingencies, including, among others, risks and uncertainties described in the section entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements,” all of which are difficult to predict and many of which are beyond our control. There can be no assurance that the underlying assumptions or estimates will be realized; in particular, while we do not expect that our estimated preliminary results will differ materially from our actual results for the three months ended March 31, 2021, we cannot assure you that our estimated preliminary results for the three months ended March 31, 2021 will be indicative of our financial results for future interim periods or for the full year ending December 31, 2021. As a result, the preliminary results cannot necessarily be considered predictive of actual operating results for the periods described above, and this information should not be relied on as such. You should read this information together with the sections of this prospectus entitled “Selected Financial and Other Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited financial statements, including the notes thereto, included in this prospectus.

The preliminary results presented above were prepared by and are the responsibility of our management. No independent registered public accounting firm has examined, compiled or otherwise performed any procedures with respect to the financial information contained in these preliminary results. Accordingly, no independent registered public accounting firm has expressed any opinion or given any other form of assurance with respect thereto and no

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independent registered public accounting firm assumes any responsibility for the preliminary results. The report of the independent registered public accounting firm included elsewhere in this prospectus relates to our historical financial information. Such report does not extend to these preliminary results and should not be read to do so.

By including in this prospectus a summary of certain preliminary results regarding our financial and operating results, neither we nor any of our respective advisors or other representatives has made or makes any representation to any person regarding our ultimate performance compared to the information contained in the preliminary results and actual results may materially differ from those described above, and we do not undertake any obligation unless required by applicable law to update or otherwise revise the preliminary results set forth herein to reflect circumstances existing since their preparation or to reflect the occurrence of unanticipated events or to reflect changes in general economic or industry conditions, even in the event that any or all of the underlying assumptions are shown to be in error.

Summary of Risk Factors

Investing in our Class A common shares involves risks. You should carefully consider the risks described in the “Risk Factors” before making a decision to invest in our Class A common shares. If any of these risks actually occur, our business, financial condition or results of operations would likely be materially adversely affected. In such case, the trading price of our Class A common shares would likely decline, and you may lose all or part of your investment. The following is a summary of some of the principal risks we face:

•        We operate in a highly competitive industry, and our inability to compete successfully would materially and adversely affect our business, results of operations, financial condition, and future prospects.

•        If we cannot keep pace with rapid developments and change in our industry, the use of our products and services could decline, reducing our revenues.

•        Our business has generated losses, and we intend to continue to make significant investments in our business. Thus, our results of operations and operating metrics may fluctuate and we may continue to generate losses in the future, which may cause the market price of our Class A common shares to decline.

•        If we are unable to grow our user base and maintain active users or otherwise implement our growth strategy, our business, results of operations, financial condition and future prospects would be materially and adversely affected.

•        We have experienced rapid growth, which may be difficult to sustain and which may place significant demands on our operational, administrative, and financial resources.

Our Corporate Structure

We are a Cayman Islands exempted company incorporated with limited liability on January 18, 2021 for purposes of undertaking our initial public offering.

Prior to the completion of this offering, the existing shareholders of PicPay Brazil will contribute all of their shares in PicPay Brazil to us, in a transaction or series of transactions that we refer to as our “Corporate Reorganization.” As a result of our Corporate Reorganization, PicPay Brazil will become our direct subsidiary.

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Until the contribution of PicPay Brazil shares to us, we will not have commenced operations and will have only nominal assets and liabilities and no material contingent liabilities or commitments. The following chart reflects our corporate structure after giving effect to our Corporate Reorganization.

____________

(1)      All of the issued and outstanding capital stock of J&F Participações is beneficially owned by the Batista family. J&F Participações is jointly controlled, pursuant to a shareholders’ agreement among the shareholders of J&F Participações, by Messrs. José Batista Sobrinho and José Batista Júnior (the latter through JBJ Agropecuária Ltda.). For more information about the shareholders’ agreement of J&F Participações, see “Principal Shareholders — Shareholders’ Agreement of J&F Participações.”

(2)      Mr. Anderson Chamon is PicPay Brazil’s co-founder and its vice-president of technology and products.

(3)      Mr. José Antonio Batista Costa is our CEO. He is the grandson of Mr. José Batista Sobrinho and a nephew of Messrs. José Batista Júnior, Joesley Mendonça Batista and Wesley Mendonça Batista. For more information about Mr. José Antonio Batista Costa, see “Management.”

(4)      Mr. Anderson Chamon holds 80% of the total capital stock of Belami Holdings. Mr. José Antonio Batista Costa holds the remaining 20% of the total capital stock of Belami Holdings.

(5)      Mr. José Antonio Batista Costa holds 90% of the total capital stock of JAB Holland. Mr. Anderson Chamon holds the remaining 10% of the total capital stock of JAB Holland.

(6)      It is expected that Class B common shares held by J&F Participações representing 1.11% of our total capital stock will be transferred to AGR Capital immediately prior to the consummation of this offering. In connection with these transfers, these Class B common shares will be converted into Class A common shares in accordance with our Articles of Association. Accordingly, immediately prior to the consummation of this offering, AGR Capital will hold 19% of our Class A common shares, 0% of our Class B common shares and 1.11% of our total common shares.

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After accounting for the        new Class A common shares that will be issued and sold by us in this offering (assuming no exercise of the underwriters’ option to purchase additional shares), we will have a total of        common shares issued and outstanding immediately following this offering, consisting of        Class A common shares and          Class B common shares. J&F International will directly own 100% of our Class B common shares, which will represent approximately          % of the combined voting power of our outstanding share capital following this offering, assuming no exercise of the underwriters’ option to purchase additional shares. J&F International is a wholly-owned subsidiary of J&F Participações. Accordingly J&F Participações will control our company. As described in the charts above and below, all of the issued and outstanding capital stock of J&F Participações is beneficially owned by the Batista family and is jointly controlled, pursuant to a shareholders’ agreement among the shareholders of J&F Participações, by Messrs. José Batista Sobrinho and José Batista Júnior. For more information about the shareholders’ agreement of J&F Participações, see “Principal Shareholders — Shareholders’ Agreement of J&F Participações.”

The following chart reflects our corporate structure, after giving effect to our Corporate Reorganization and this offering (assuming no exercise of the underwriters’ option to purchase additional shares).

____________

(1)      All of the issued and outstanding capital stock of J&F Participações is beneficially owned by the Batista family. J&F Participações is jointly controlled, pursuant to a shareholders’ agreement among the shareholders of J&F Participações, by Messrs. José Batista Sobrinho and José Batista Júnior (the latter through JBJ Agropecuária Ltda.). For more information about the shareholders’ agreement of J&F Participações, see “Principal Shareholders — Shareholders’ Agreement of J&F Participações.”

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(2)      Mr. Anderson Chamon is PicPay Brazil’s co-founder and its vice-president of technology and products.

(3)      Mr. José Antonio Batista Costa is our CEO. He is the grandson of Mr. José Batista Sobrinho and a nephew of Messrs. José Batista Júnior, Joesley Mendonça Batista and Wesley Mendonça Batista. For more information about Mr. José Antonio Batista Costa, see “Management.”

(4)      Mr. Anderson Chamon holds 80% of the total capital stock of Belami Holdings. Mr. José Antonio Batista Costa holds the remaining 20% of the total capital stock of Belami Holdings.

(5)      Mr. José Antonio Batista Costa holds 90% of the total capital stock of JAB Holland. Mr. Anderson Chamon holds the remaining 10% of the total capital stock of JAB Holland.

(6)      Other shareholders include: (a) AGR Capital, which will directly own               % of our Class A common shares immediately following the consummation of this offering; and (b) investors purchasing our Class A common shares in this offering,

Corporate Information

Our principal executive offices are located at Av. Manuel Bandeira, 291, Block A, 2nd floor, São Paulo, SP, 05317-020, Brazil. Our principal website is www.picpay.com. The information contained in, or accessible through, our website is not incorporated by reference in, and should not be considered part of, this prospectus.

Implications of Being an Emerging Growth Company

As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the JOBS Act. An emerging growth company may take advantage of specified exemptions from various requirements that are otherwise applicable generally to public companies in the United States. These provisions include:

•        the ability to present more limited financial data for our IPO, including presenting only two years of audited financial statements and only two years of selected financial data, as well as only two years of related management’s discussion and analysis of financial condition and results of operations disclosure;

•        an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002; and

•        to the extent that we no longer qualify as a foreign private issuer, (1) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (2) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation, including golden parachute compensation.

We may take advantage of certain of these provisions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.07 billion in annual revenue, have more than $700 million in market value of our ordinary shares held by non-affiliates or issue more than $1.0 billion of non-convertible debt over a three-year period. We may choose to take advantage of some but not all of the above-described provisions. For example, Section 107 of the JOBS Act provides that an emerging growth company can use the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Given that we currently report and expect to continue to report under IFRS, as issued by the IASB, we have irrevocably elected not to avail ourselves of any extended transition period provided for by IFRS and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required by the IASB. We have taken advantage of reduced reporting requirements in this prospectus. Accordingly, the information contained herein may be different than the information you receive from other public companies. References to an “emerging growth company” in this prospectus shall have the meaning associated with that term in the JOBS Act.

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The Offering

This summary highlights information presented in greater detail elsewhere in this prospectus. This summary is not complete and does not contain all the information you should consider before investing in our Class A common shares. You should carefully read this entire prospectus before investing in our Class A common shares including “Risk Factors” and our audited financial statements.

Issuer

 

PicS Ltd.

Number of Class A common shares offered

 

        Class A common shares.

Offering price range

 

Between US$        and US$        per Class A common share.

Voting rights

 

The Class A common shares will be entitled to one vote per share, whereas the Class B common shares (which are not being sold in this offering) will be entitled to 10 votes per share. See “Description of Share Capital — Voting Rights.”

Preemptive rights

 

Holders of our Class B common shares are entitled to preemptive rights to purchase additional common shares in the event that we issue additional Class A common shares, upon the same economic terms and at the same price, in order to allow them to maintain their proportional ownership interests. This right to maintain a proportional ownership interest may be waived in respect of any capital increase in our company by the holders of a majority of our Class B common shares. For more information, see “Description of Share Capital — Preemptive or Similar Rights.”

In addition, see “Risk Factors — Risks Relating to Our Class A Common Shares and this Offering — We have granted the holders of our Class B common shares preemptive rights to acquire shares that we may sell in the future, which may impair our ability to raise funds.”

Option to purchase additional Class A common shares

 


We have granted the underwriters the right to purchase up to an additional        Class A common shares from us within 30 days of the date of this prospectus, at the public offering price, less underwriting discounts and commissions payable to us, on the same terms as set forth in this prospectus.

Listing

 

We intend to apply to list our Class A common shares on Nasdaq, under the symbol “PICS.”

Use of proceeds

 

We estimate that the net proceeds to us from the offering will be approximately US$        (or US$        million if the underwriters exercise in full their option to purchase additional shares), assuming an initial public offering price of US$        per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

We intend to use the net proceeds from this offering to fund our growth strategy, which may include M&A transactions, and for general corporate purposes. To this end, we intend to contribute the net proceeds from this offering to our operating subsidiary PicPay Brazil in the form of one or more capital contributions. See “Use of Proceeds.”

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Share capital before and after offering

 

Immediately prior to the completion of this offering,          Class A common shares and        Class B common shares of our authorized share capital will be issued, fully paid and outstanding. Upon the completion of this offering, we will have        Class A common shares and        Class B common shares of our authorized share capital issued and outstanding (assuming the underwriters do not elect to exercise their option to purchase additional Class A common shares) or          Class A common shares and          Class B common shares of our authorized share capital issued and outstanding (assuming the underwriters’ option to purchase additional common shares is exercised in full).

The remaining authorized but unissued shares are presently undesignated and may be issued by the board of directors of PicS as common shares of any class or as shares with preferred, deferred or other special rights or restrictions. See “Description of Share Capital.”

Dividend policy

 

The amount of any distributions will depend on many factors, such as our results of operations, financial condition, cash requirements, prospects and other factors deemed relevant by our board of directors and, where applicable, our shareholders. We do not anticipate paying any cash dividends in the foreseeable future. See “Dividends and Dividend Policy.”

Lock-up agreements

 

We, our executive officers and directors who will hold shares upon completion of this offering and our shareholders J&F International, Belami Capital, JAB Capital and AGR Capital, which will directly hold all of the share capital held by our existing shareholders immediately prior to the consummation of this offering, intend to enter into lock-up agreements that restrict us and them, subject to specified exceptions, from selling or otherwise transferring any of our Class A common shares or securities convertible into, exchangeable for, exercisable for, or repayable with our Class A common shares, including our Class B common shares, for 180 days after the date of this prospectus without first obtaining the written consent of        . For more information about these lock-up agreements and the exceptions thereto, see “Underwriting.”

Risk factors

 

See “Risk Factors” and the other information included in this prospectus for a discussion of factors you should consider before deciding to invest in our Class A common shares.

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Summary Financial and Other Information

The summary financial information presented below has been derived from the audited financial statements of PicPay Brazil as of and for the years ended December 31, 2020 and 2019, prepared in accordance with IFRS, as issued by the IASB. This information should be read in conjunction with “Presentation of Financial and Other Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited financial statements, included elsewhere in this prospectus.

Financial Data

 

For the Year Ended December 31,

   

2020(1)

 

2020

 

2019

   

(in US$ thousands, except as otherwise disclosed)

 

(in R$ thousands, except as otherwise disclosed)

Statement of Profit or Loss Data

   

 

   

 

   

 

Net revenue from transaction activities and other services

 

16,011

 

 

83,204

 

 

21,915

 

Financial income

 

58,952

 

 

306,354

 

 

63,666

 

Total revenue and income

 

74,963

 

 

389,558

 

 

85,581

 

     

 

   

 

   

 

Cost of sales and services

 

(55,909

)

 

(290,543

)

 

(32,497

)

Selling expenses

 

(112,672

)

 

(585,524

)

 

(218,041

)

Administrative expenses

 

(36,439

)

 

(189,360

)

 

(56,262

)

Financial expenses

 

(13,575

)

 

(70,547

)

 

(42,618

)

Other (expenses) income, net

 

(11,023

)

 

(57,283

)

 

(2,787

)

Loss for the year

 

(154,656

)

 

(803,699

)

 

(266,624

)

Loss attributable to the Company’s shareholders

 

(154,656

)

 

(803,699

)

 

(266,624

)

     

 

   

 

   

 

Weighted average number of shares

 

94,762

 

 

94,762

 

 

31,933

 

Loss per share – basic and diluted (R$ or US$, as the case may be)(2)

 

(1,632

)

 

(8,481

)

 

(8,349

)

____________

(1)     For convenience purposes only, amounts in reais have been translated into U.S. dollars at the selling rate as of December 31, 2020 of R$5.1967 to US$1.00, as reported by the Brazilian Central Bank. These translations should not be considered representations that any such amounts have been, could have been or could be converted at that or any other exchange rate. See “Exchange Rates” for further information about recent fluctuations in exchange rates.

(2)      Calculated by dividing the net loss for the year by the weighted average number of shares outstanding during the year of 94,762 shares 2020 and 31,933 shares in 2019.

 

As of December 31,

   

2020(1)

 

2020

 

2019

   

(in US$ thousands)

 

(in R$ thousands)

Statement of Financial Position Data

           

Cash and cash equivalents

 

21,528

 

111,874

 

19,960

Financial investments (measured at fair value through other comprehensive income)

 

72,287

 

375,656

 

96,515

Financial investments (measured at amortized cost)

 

178,960

 

930,000

 

3,836

Trade receivables (measured at amortized cost)

 

85,359

 

443,583

 

422,516

Total assets

 

419,669

 

2,180,893

 

627,323

Third party funds (measured at amortized cost)

 

247,999

 

1,288,776

 

102,312

Funding from related parties (measured at amortized cost)

 

74,196

 

385,573

 

392,684

Total liabilities

 

359,901

 

1,870,295

 

576,312

Equity

 

59,768

 

310,598

 

51,011

Total liabilities and shareholders’ equity

 

419,669

 

2,180,893

 

627,323

____________

(1)      For convenience purposes only, amounts in reais have been translated into U.S. dollars at the selling rate as of December 31, 2020 of R$5.1967 to US$1.00, as reported by the Brazilian Central Bank. These translations should not be considered representations that any such amounts have been, could have been or could be converted at that or any other exchange rate. See “Exchange Rates” for further information about recent fluctuations in exchange rates.

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For the Year Ended December 31,

   

2020(1)

 

2020

 

2019

   

(in US$ thousands)

 

(in R$ thousands)

Other Financial Data

   

 

   

 

   

 

Cash flows related to:

   

 

   

 

   

 

Operating activities

 

(71,396

)

 

(371,025

)

 

(467,660

)

Investing activities

 

(18,396

)

 

(95,601

)

 

(18,811

)

Financing activities

 

107,480

 

 

558,540

 

 

488,442

 

____________

(1)      For convenience purposes only, amounts in reais have been translated into U.S. dollars at the selling rate as of December 31, 2020 of R$5.1967 to US$1.00, as reported by the Brazilian Central Bank. These translations should not be considered representations that any such amounts have been, could have been or could be converted at that or any other exchange rate. See “Exchange Rates” for further information about recent fluctuations in exchange rates.

Operating Data

In connection with our management’s analysis of our ongoing business operations, including comparing our performance with that of our competitors, our management uses certain indicators to measure our performance, including our: (1) number of registered users; (2) number of active users; (3) number of active transacting users; (4) aggregate wallet balance and number of users with a wallet balance; and (5) total payment volume (TPV). For more information about our key performance indicators, see “Presentation of Financial and Other Information — Key Performance Indicators.”

 

As of December 31,

   

2020

 

2019

 

2018

Operating Data

           

Users (in millions):

           

Registered users(1)

 

38.8

 

14.9

 

10.0

Active users(2)

 

28.4

 

6.4

 

2.6

Active transacting users(3)

 

16.2

 

3.1

 

2.2

Users with a wallet balance

 

8.3

 

1.5

 

0.3

Wallet balance (in R$ millions)(4)

 

1,163

 

78

 

12

____________

(1)      Users who download our application and create an account with us. From December 31, 2018 to December 31, 2020, our registered user base grew at a CAGR of 97%. We gained approximately 3.6 million new registered users as a result of the Brazilian government’s COVID-19 emergency assistance program.

(2)      Users who have opened our application at least once during the preceding 12 months. From December 31, 2018 to December 31, 2020, our active user base grew at a CAGR of 231%. We gained approximately 3.6 million new active users as a result of the Brazilian government’s COVID-19 emergency assistance program.

(3)      Users who have made at least one financial transaction on our platform during the preceding 12 months. From December 31, 2018 to December 31, 2020, our active transacting user base grew at a CAGR of 171%. We gained approximately 3.6 million new active transacting users as a result of the Brazilian government’s COVID-19 emergency assistance program.

(4)      Refers to the total amount of money that is available in users’ payment accounts.

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For the Year
Ended December 31,

   

2020

 

2019

 

2018

   

(in R$ billions)

Operating Data

   

 

       

TPV(1)

 

36.2

 

 

7.0

 

1.4

____________

(1)      Refers to the aggregate amount of payments, outbound transfers (sending money) and cash-out, net of reversals, successfully completed on our platform. Our 2020 TPV run rate (defined as 12 times our December 2020 TPV of R$4.13 billion) was R$49.3 billion. From January 1, 2018 to December 31, 2020, our TPV grew at a CAGR of 408%.

 

For the three months ended December 31,

 

For the three months ended September 30,

 

For the three months ended June 30,

 

For the three months ended March 31,

   

2020

 

2019

 

2020

 

2019

 

2020

 

2019

 

2020

 

2019

   

(in R$ billions)

Operating Data

                               

TPV(1)

 

11.3

 

3.1

 

15.0

 

2.0

 

6.3

 

1.2

 

3.7

 

0.8

____________

(1)      Refers to the aggregate amount of payments, outbound transfers (sending money) and cash-out, net of reversals, successfully completed on our platform.

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Risk Factors

An investment in our Class A common shares involves a high degree of risk. You should carefully consider the risks and uncertainties described below and the other information in this prospectus before you decide to purchase our Class A common shares. In particular, investing in the securities of issuers whose operations are located in emerging market countries such as Brazil involves a higher degree of risk than investing in the securities of issuers whose operations are located in the United States or other more developed countries. If any of the risks discussed in this prospectus actually occur, alone or together with additional risks and uncertainties not currently known to us, or that we currently deem immaterial, our business, financial condition, results of operations and prospects may be materially adversely affected. If this were to occur, the value of our Class A common shares may decline and you may lose all or part of your investment.

Risks Relating to Our Business and Industry

We operate in a highly competitive industry, and our inability to compete successfully would materially and adversely affect our business, results of operations, financial condition, and future prospects.

We operate in a highly competitive and dynamic industry. As a super app, we face competition from a variety of participants in Brazil, including financial institutions and social media companies. Our primary competitors for each of our strategic pillars are:

•        Social:

•        larger social media companies and applications, such as Facebook, WhatsApp, Instagram, Telegram and WeChat.

•        Digital Wallet:

•        paper-based transactions (principally cash and checks);

•        banks and financial institutions in Brazil that provide traditional payment methods, particularly credit and debit cards and electronic bank transfers;

•        merchant acquirers in Brazil, such as GetNet, Stone, Rede and Cielo;

•        international and regional payment processing companies, such as PayPal, MercadoPago from MercadoLibre, Square and PagSeguro; and

•        other technology companies, including digital and mobile applications, that provide P2P, P2B and P2M electronic payment services in Brazil, such as WeChat and WhatsApp, and companies that offer the PIX instant payment system developed by the Brazilian Central Bank.

•        Financial Marketplace:

•        traditional banks and other financial institutions in Brazil that provide credit and debit cards, loans and other financial products and services; and

•        other technology companies, including digital and mobile applications, that provide financial services in Brazil, such as Nubank, XP, Banco Inter and PagBank from PagSeguro.

•        PicPay Store:

•        providers of digital and physical goods who offer their products through their own digital stores; and

•        other technology companies, including digital and mobile applications, that offer third party digital goods to consumers in Brazil, such as WeChat, Amazon, AliExpress, MercadoLibre, Magazine Luiza and B2W.

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•        Ads:

•        traditional sources of advertising and marketing, such as digital and print media; and

•        other technology companies, including digital and mobile applications, that offer advertising platforms, such as WeChat, Facebook, Google and Instagram.

We expect competition to intensify in the future, both as emerging technologies continue to enter the marketplace and as large financial incumbents increasingly seek to innovate the services that they offer to compete with our platform. Technological advances and the continued growth of e-commerce activities have increased consumers’ accessibility to products and services and led to the expansion of competition in digital payment options such as pay-over-time solutions. We face competition in areas such as: flexibility on payment options; duration, simplicity, and transparency of payment terms; reliability and speed in processing payments; compliance and security; promotional offerings; fees; approval rates; ease-of-use; marketing expertise; service levels; products and services; technological capabilities and integration; customer service; brand and reputation; and consumer and merchant satisfaction.

Some of our competitors, particularly credit issuing banks and social media companies, are substantially larger than we are, which gives those competitors advantages we do not have, such as more diversified products, a broader consumer and merchant base, the ability to reach more consumers, the ability to cross-sell their products, operational efficiencies, the ability to cross-subsidize their offerings through their other business lines, more versatile technology platforms, broad-based local distribution capabilities and lower-cost funding. Our potential competitors may also have longer operating histories, more extensive and broader consumer and merchant relationships, and greater brand recognition and brand loyalty than we have. For example, more established companies that possess large, existing consumer and merchant bases, substantial financial resources and established distribution channels could enter the market.

Increased competition could result in the need for us to alter the pricing and services we offer to merchants or consumers. If we are unable to successfully compete, the demand for our platform and products could stagnate or substantially decline, and we could fail to retain or grow the number of consumers or merchants using our platform, which would reduce the attractiveness of our platform to other consumers and merchants, and which would materially and adversely affect our business, results of operations, financial condition, and future prospects.

If we cannot keep pace with rapid developments and change in our industry, the use of our products and services could decline, reducing our revenues.

The technology-enabled multipurpose industry in which we operate is subject to rapid and significant changes, new product and service introductions, evolving industry standards, changing client needs and the entrance of new competitors, including nontraditional competitors. In order to remain competitive, we are continually involved in a number of projects to develop new products and services or compete with these new competitors, and other new offerings emerging in our industry. These projects carry risks, such as cost overruns, delays in delivery, performance problems and lack of user adoption. Any delay in the delivery of new products or services, performance problems or the failure to differentiate our products and services or to accurately predict and address market demand could render our products and services less desirable, or even obsolete, to our users. Furthermore, even though the market for our products and services is evolving, it may not continue to develop rapidly enough for us to recover the costs we have incurred in developing new products and services targeted at this market.

Our business has generated losses, and we intend to continue to make significant investments in our business. Thus, our results of operations and operating metrics may fluctuate and we may continue to generate losses in the future, which may cause the market price of our Class A common shares to decline.

We generated net losses of R$803.7 million and R$266.6 million in the years ended December 31, 2020 and 2019, respectively. We intend to continue to make significant investments in our business, including expenses relating to: (1) the development of new products, services and features; (2) marketing and advertising to increase our brand awareness; and (3) general administration, including legal, finance and other compliance expenses related to being a public company. For example, in 2021, we expect to launch several features on our platform, including P2P lending, insurance, investments, bill payment scheduling, direct messaging and PicPay Store offerings through user feeds. However, these improvements, which require us to incur significant up-front costs, may not result in the

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long-term benefits that we expect, which is to increase our revenue by increasing our base of registered, active and active transacting users. In addition, increases in our user base could cause us to incur increased losses, because costs associated with new users are generally incurred up front, while revenue is recognized thereafter as customers utilize our services. If we are unable to generate adequate revenue growth and manage our expenses, our results of operations and operating metrics may fluctuate and we may continue to incur significant losses, which could cause the market price of our Class A common shares to decline.

If we are unable to grow our user base and maintain active users or otherwise implement our growth strategy, our business, results of operations, financial condition and future prospects would be materially and adversely affected.

We generate revenue primarily from our electronic payment and financial intermediation services, in particular by: (1) charging fees in connection with certain payment transactions and fund transfers carried out by our users through our platform; (2) offering the PicPay Card; (3) providing correspondent bank services to Banco Original; and (4) earning commissions from the sale of third party goods on the PicPay Store. Our success depends on our ability to generate repeat use and increased transaction volume from existing users and to attract new users to our platform. If we are not able to continue to grow user base and maintain active users, we will not be able to continue to grow our business.

The attractiveness of our platform to users depends upon, among other things, the mix of products and services available to users through our platform, our brand and reputation, user experience and satisfaction, user trust and perception of our solutions, technological innovation and products and services offered by competitors. In order to grow effectively, we must continue to offer new products and services, strengthen our existing platform, develop and improve our internal controls, create and improve our reporting systems and timely address issues as they arise. These efforts may require substantial financial expenditures, commitments of resources, developments of our processes and other investments and innovations.

In addition, a key pillar of our growth strategy is the expansion of our social media network, which is associated with key assumptions, including the increased internet usage in Brazil and a demand for integrated platforms with differentiated solutions. Successful implementation of this strategy will require a significant investment in technology development, operations and marketing and sales. We may not achieve market expansion and acceptance by users and we may incur problems introducing new solutions and services, including if our underlying assumptions are not met. We may also experience losses related to these investments, which could have a material adverse effect on our results of operations. There can be no assurance that we will be able to successfully capitalize on growth opportunities, which may adversely impact our business model, revenues, results of operations and financial condition.

If we fail to retain our relationship with existing users, if we do not attract new users to our platform and products or if we do not continually expand usage and volume from users on our platform, our business, results of operations, financial condition and prospects would be materially and adversely affected.

We have experienced rapid growth, which may be difficult to sustain and which may place significant demands on our operational, administrative, and financial resources.

Since we launched our platform in 2012 we have experienced significant growth. For example, our number of registered users increased from 10.0 million as of December 31, 2018 to 38.8 million as of December 31, 2020, and our total payment volume increased from R$1.4 billion in 2018 to R$36.2 billion in 2020. We have a relatively limited operating history at our current scale, and our growth in recent periods exposes us to increased risks, uncertainties, expenses, and difficulties. If we are unable to maintain at least our current level of operations using cash flow, our business, results of operations, financial condition, and future prospects would be materially and adversely affected.

As a result of our growth, we face significant challenges in:

•        increasing the number of users with, and the volume of, payments facilitated through our platform;

•        maintaining and developing relationships with existing merchants and additional merchants;

•        securing funding to maintain our operations and future growth;

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•        maintaining adequate financial, business, and risk controls;

•        implementing new or updated information and financial and risk controls and procedures;

•        navigating complex and evolving regulatory and competitive environments;

•        attracting, integrating and retaining an appropriate number and technological skill level of qualified employees;

•        particularly in the post-COVID-19 environment, training, managing, and appropriately sizing our workforce and other components of our business on a timely and cost-effective basis;

•        expanding within existing markets;

•        entering into new markets and introducing new solutions;

•        continuing to develop, maintain, protect, and scale our platform;

•        effectively using limited personnel and technology resources;

•        maintaining the security of our platform and the confidentiality of the information (including personally identifiable information) provided and utilized across our platform; and

•        continuing to increase our infrastructure to ensure that it is capable of supporting an increase in the number of our users.

We may not be able to manage our expanding operations effectively, and any failure to do so could adversely affect our ability to generate revenue and control our expenses, and would materially and adversely affect our business, results of operations, financial condition, and future prospects. Any evaluation of our business and prospects should be considered in light of the limited history of our growth, and the risks and uncertainties inherent in investing in early-stage companies.

Changes to payment card networks or acquirer fees, rules or practices could harm our business.

As a sub-acquirer, we pay fees to acquirers for payment processing transactions that occur on their platforms. From time to time, acquirers have increased, and may continue to increase in the future, the fees that they charge for transactions that access their networks, which could negatively impact us and significantly increase our costs.

We are required to comply with payment card network operating rules, including special operating rules for payment service providers to merchants. We have agreed to reimburse acquirers for any fines they are assessed by payment card networks resulting from any rule violations by us or our merchants. As of the date of this prospectus, we had not paid any such fines to our acquirers. We may also be directly liable to the payment card networks for rule violations. The payment card networks and acquirers could adopt new operating rules or interpret or re-interpret existing rules that we or our merchants might find difficult or even impossible to follow, or costly to implement. As a result, we could lose our ability to give consumers the option of using certain payment cards to fund their payments. If we are unable to accept certain payment cards or are limited in our ability to do so, our business would be adversely affected.

We and our acquirers have implemented specific business processes for merchants to comply with payment card network operating rules for providing services to merchants. Any failure to comply with these rules could result in fines. We are also subject to fines from payment card networks if we fail to detect that merchants are engaging in activities that are illegal or considered “high risk” under their network operating rules, including the sale of certain types of digital content. For “high risk” merchants, we must either prevent such merchants from using our services or register such merchants with the payment card networks and conduct additional monitoring with respect to such merchants. Although the amount of these fines has not been material to date, we could be subject to significant additional fines in the future, which could result in a termination of our ability to accept payment cards or require changes in our process for registering new customers, which would adversely affect our business. Payment card network rules may also increase the cost of, impose restrictions on, or otherwise negatively impact the development of, our retail point-of-sale solutions, which may negatively impact their deployment and adoption.

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If we fail to promote, protect, and maintain our brand in a cost-effective manner, we may lose market share and our revenue may decrease.

We believe that developing, protecting and maintaining awareness of our “PicPay” brand in a cost-effective manner is critical to attracting new and maintaining active users to our platform. Successful promotion of our brand will depend largely on the effectiveness of our marketing efforts and the experience of our users. Our efforts to build our brand have involved significant expense, and we expect to increase our marketing spend in the near term. These brand promotion activities may not result in increased revenue and, even if they do, any increases may not offset the expenses incurred. Additionally, the successful protection and maintenance of our brand will depend on our ability to obtain, maintain, protect and enforce trademark and other intellectual property protection for our brand. If we fail to successfully promote, protect and maintain our brand or if we incur substantial expenses in an unsuccessful attempt to promote, protect and maintain our brand, we may lose our existing users to our competitors or be unable to attract new users. Any such loss of existing users, or inability to attract new users, would have an adverse effect on our business and results of operations.

Our systems and our third party providers’ systems may fail due to factors beyond our control, which could interrupt our service, cause us to lose business and increase our costs.

We depend on the efficient and uninterrupted operation of numerous systems, including our computer systems, software, and telecommunications networks, as well as the systems of third parties. Our systems and operations or those of our third-party providers, could be exposed to damage or interruption from, among other things, fire, natural disaster, power loss, telecommunications failure, unauthorized entry and computer viruses. We do not maintain insurance policies specifically for property and business interruptions. Defects in our systems or those of third parties, errors or delays in the processing of payment transactions, telecommunications failures or other difficulties could result in, among others:

•        loss of revenues;

•        loss of users;

•        loss of merchant and cardholder data;

•        loss of our Brazilian Central Bank authorization to operate as a payment institution (instituição de pagamento) in Brazil;

•        fines or other penalties imposed by the Brazilian Central Bank, as well as other measures taken by the Brazilian Central Bank, including intervention, temporary special management systems, the imposition of insolvency proceedings, and/or the out-of-court liquidation of PicPay, and any of our subsidiaries to whom licenses may be granted in the future;

•        harm to our business or reputation resulting from negative publicity;

•        exposure to fraud losses or other liabilities;

•        additional operating and development costs; and/or

•        diversion of technical and other resources.

In particular, we rely heavily on Amazon Web Services, or AWS, to provide cloud computing, storage, processing and other related services. Any disruption of or interference with our use of these services could negatively affect our operations and seriously harm our business. AWS has experienced, and may experience in the future, interruptions, delays or outages in service availability due to a variety of factors, including infrastructure changes, human or software errors, hosting disruptions and capacity constraints. Capacity constraints could arise from a number of causes such as technical failures, natural disasters, fraud or security attacks. The level of service provided by AWS, or regular or prolonged interruptions in the services provided by AWS, could also impact the use of, and our clients’ satisfaction with, our products and services and could harm our business and reputation.

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While we take precautions to prevent consumer identity fraud, it is possible that identity fraud may still occur or has occurred, which may adversely affect our business.

There is risk of fraudulent activity associated with our platform and third parties handling consumer information. Our resources, technologies, and fraud prevention tools may be insufficient to accurately detect and prevent fraud.

We bear the risk of consumer fraud in a transaction involving us, a consumer, and a merchant, and we generally have limited recourse to the merchant to collect the amount owed by the consumer. In the event that a billing dispute between a cardholder and a merchant is not resolved in favor of the merchant, including in situations in which the merchant is engaged in fraud, the transaction is typically “charged back” to the merchant and the purchase price is credited or otherwise refunded to the cardholder. If we are unable to collect chargeback or refunds from the merchant’s account, or if the merchant refuses to or is unable to reimburse us for a chargeback or refunds due to closure, bankruptcy, or other reasons, we may bear the loss for the amounts paid to the cardholder. Our financial results would be adversely affected to the extent these merchants do not fully reimburse us for the related chargebacks. Historically, chargebacks occur more frequently in online transactions than in in-person transactions, and more frequently for goods than for services. In addition, the risk of chargebacks is typically greater with those of our merchants that promise future delivery of goods and services, which we allow on our service. Significant amounts of fraudulent cancellations or chargebacks could adversely affect our business or financial condition.

High profile fraudulent activity or significant increases in fraudulent activity could also lead to regulatory intervention, negative publicity, and the erosion of trust from our consumers and merchants, and could materially and adversely affect our business, results of operations, financial condition, future prospects, and cash flows.

Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business.

Our quarterly results, including revenue, expenses, total payment volume, consumer metrics, and other key metrics, have fluctuated significantly in the past and are likely to do so in the future. Accordingly, the results for any one quarter are not necessarily an indication of future performance. Our quarterly results are likely to fluctuate due to a variety of factors, some of which are outside of our control, and as a result, may not fully reflect the underlying performance of our business. Fluctuations in quarterly results may adversely affect the price of our Class A common shares. In addition, many of the factors that affect our quarterly results are difficult for us to predict. If our revenue, expenses, or key metrics in future quarters fall short of the expectations of our investors and financial analysts, the price of our Class A common shares will be adversely affected.

Fraud by merchants or others could have a material adverse effect on our business, financial condition, and results of operations.

We may be subject to potential liability for fraudulent electronic payment transactions or credits initiated by merchants or others. Examples of merchant fraud include when a merchant or other party knowingly uses a stolen or counterfeit credit, debit or prepaid card, card number, or other credentials to record a false sales transaction, processes an invalid card, or intentionally fails to deliver the merchandise or services sold in an otherwise valid transaction. Criminals are using increasingly sophisticated methods to engage in illegal activities such as counterfeiting and fraud. It is possible that incidents of fraud could increase in the future. Failure to effectively manage risk and prevent fraud would increase our chargeback liability or other liability. Increases in chargebacks or other liability could have a material adverse effect on our business, financial condition, and results of operations.

We are subject to economic and political risk, the business cycles and credit risk of our clients and volatility in the overall level of consumer, business and government spending, which could negatively impact our business, financial condition and results of operations.

The industries in which we operate depend heavily on the overall level of consumer, business and government spending. We are exposed to general economic conditions that affect consumer confidence, consumer spending, consumer discretionary income or changes in consumer purchasing habits. A sustained deterioration in general economic conditions, including a rise in unemployment rates in Brazil, or increases in interest rates may adversely affect our financial performance by reducing the number or average purchase amount of transactions made using

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electronic payments. A reduction in the amount of consumer spending could result in a decrease in our revenue and profits. If our users make fewer transactions or spend less money per transaction, we will have fewer transactions to process at lower amounts, resulting in lower revenue.

In addition, a recessionary economic environment could affect our merchants through a higher rate of bankruptcy filings, resulting in lower revenues and earnings for us. Our merchants are liable for any charges properly reversed by the card issuer on behalf of the cardholder. Our associated participants are also liable for any fines, or penalties, that may be assessed by any payment schemes. In the event that we are not able to collect such amounts from the associated participants, whether due to fraud, breach of contract, insolvency, bankruptcy or any other reason, we may be liable for any such charges. Furthermore, in the event of a closure of a merchant, we are unlikely to receive our fees for any services rendered to that merchant in its final months of operation, including subscription revenue owed to us from such merchant’s equipment rental obligations. Any of the foregoing risks would negatively impact our business, financial condition and results of operations. See “— Risks Relating to Brazil.”

A decline in the use of our payment platform or adverse developments with respect to the payment processing industry in general could have a material adverse effect on our business, financial condition and results of operations.

If consumers do not continue to use our platform for their payment transactions or if there is a change in the mix of payments between cash, credit, debit and prepaid cards that is adverse to us, it could have a material adverse effect on our business, financial condition and results of operations. We believe future growth in the use of credit, debit and prepaid cards and other electronic payments will be driven by the cost, ease-of-use and quality of services offered to consumers and businesses. In order to consistently increase and maintain our profitability, consumers and businesses must continue to use electronic payment methods including, credit, debit and prepaid cards. Moreover, if there is an adverse development in the payments industry or Brazilian market in general, such as new legislation or regulation that makes it more difficult for our users to do business or utilize electronic payment mechanisms, our business, financial condition and results of operations may be adversely affected.

Fluctuations in interest rates may harm our business.

Processing consumer transactions made using credit cards, as well as providing for the prepayment of merchants’ receivables when users make purchases in installments, both make up a significant portion of our activities. If Brazilian interest rates increase, consumers may choose to make fewer purchases using credit cards; and fewer customers may decide to make payments in installments if our overall financing costs require us to increase the cost of our installment payment solutions to our clients. Either of these factors could cause our business activity levels to decrease, which could materially adversely affect our financial condition and results of operations. On the other hand, if Brazilian interest rates decrease, our revenues per transaction may decrease.

Our risk management policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risks, which could expose us to losses and liability and otherwise harm our business.

We operate in a rapidly changing industry. Accordingly, our risk management policies and procedures may not be fully effective in identifying, monitoring and managing our risks. Some of our risk evaluation methods depend upon information provided by others and public information regarding markets, clients or other matters that are otherwise inaccessible by us. In some cases, however, that information may not be accurate, complete or up-to-date. If our policies and procedures are not fully effective or we are not always successful in capturing all risks to which we are or may be exposed, we may suffer harm to our reputation or be subject to litigation or regulatory actions that could have a material adverse effect on our business, financial condition and results of operations.

We offer payments services and other products and services to a large number of clients, and we are responsible for vetting and monitoring these clients and determining whether the transactions we process for them are lawful and legitimate. When our products and services are used to process illegitimate transactions, and we settle those funds to merchants and are unable to recover them, we suffer losses and are exposed to liability. These types of illegitimate, as well as unlawful, transactions can also expose us to governmental and regulatory sanctions. The highly automated nature of, and liquidity offered by, our payments services make us a target for illegal or improper uses, including fraudulent or illegal sales of goods or services, money laundering, and terrorist financing.

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Identity thieves and those committing fraud using stolen or fabricated credit card or bank account numbers, or other deceptive or malicious practices, potentially can steal significant amounts of money from businesses like ours. In configuring our payments services, we face an inherent trade-off between security and client convenience. Our risk management policies, procedures, techniques, and processes may not be sufficient to identify all of the risks to which we are exposed, to enable us to mitigate the risks we have identified, or to identify additional risks to which we may become subject in the future. As a greater number of larger merchants use our services, we expect our exposure to material losses from a single merchant, or from a small number of merchants, to increase. In addition, when we introduce new services, focus on new business types, or begin to operate in markets in which we have a limited history of fraud loss, we may be less able to forecast and reserve accurately for those losses. Furthermore, if our risk management policies and processes contain errors or are otherwise ineffective, we may suffer large financial losses, we may be subject to civil and criminal liability, and our business may be materially and adversely affected.

Our services must integrate with a variety of operating systems, software, hardware, web browsers and networks, and if we are unable to ensure this connection, our business may be materially adversely affected.

We create applications and other software that enable us to provide the majority of our services. However, for some products, we are dependent on the ability of our products and services to integrate with a variety of operating systems, software, hardware and networks, as well as web browsers that we do not control. Any changes in or failures of these systems or networks, such as widespread internet inoperability in Brazil, that materially affect the functionality of our products and services impose additional costs or requirements on us or create restrictions on free competition could materially and adversely affect usage of our products and services. In the event that it is difficult for our merchants to access and use our products and services, our business may be materially and adversely affected. We also rely on bank platforms and others, including card issuers, to provide some of our products and services. If there are any issues with, or service interruptions in, these bank platforms, users may be unable to properly use our products and services, which would seriously harm our business.

In addition, our solutions, including hardware and software, depend on mobile networks offered by telecommunications operators and mobile devices developed by third parties. Changes in these networks or in the design of these mobile devices may limit the use of our solutions with such networks and devices and require modifications to our solutions. If we are unable to ensure that our hardware continues to connect effectively with such networks and devices, or if doing so is costly, our business may be materially and adversely affected.

Degradation of the quality of the products and services we offer, including support services, could adversely impact our ability to attract and retain merchants and partners.

Our clients expect a consistent level of quality in the provision of our products and services through our platform. The support services that we provide are also a key element of the value proposition to our clients. If the reliability or functionality of our products and services is compromised or the quality of those products or services is otherwise degraded, or if we fail to continue to provide a high level of support, we could lose existing clients and find it harder to attract new merchants and partners. If we are unable to scale our support functions to address the growth of our merchant and partner network, the quality of our support may decrease, which could adversely affect our ability to attract and retain merchants and partners.

We use open source software in our platform, which may subject us to litigation or other actions that could harm our business.

We use open source software in our platform, and we may use more open source software in the future. In the past, companies that have incorporated open source software into their products have faced claims challenging the ownership of open source software or compliance with open source license terms. Accordingly, we could be subject to suits by parties claiming ownership of what we believe to be open source software or claiming noncompliance with open source licensing terms. Some open source software licenses require users who use, distribute or make available across a network software or services that include open source software to publicly disclose all or part of the source code to such software or make available any derivative works of the open source code on terms unfavorable to the developer or at no cost. Additionally, if a third-party software provider has incorporated open source software into software that we license from such provider, we could be required to disclose any of our source code that incorporates or is a modification of our licensed software. If we were to use open source software subject to such licenses, we could be required to release our proprietary source code, pay damages, re-engineer our platform

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or solutions, discontinue sales, or take other remedial action, any of which could harm our business. In addition, if the license terms for updated or enhanced versions of the open source software we utilize change, we may be forced to expend substantial time and resources to re-engineer our components of our platform.

In addition, the use of third-party open source software typically exposes us to greater risks than the use of third-party commercial software because open source licensors generally do not provide warranties or controls on the functionality or origin of the software. Use of open source software may also present additional security risks because the public availability of such software may make it easier for hackers and other third parties to determine how to compromise our platform. Any of the foregoing could harm our business and could help our competitors develop products and services that are similar to or better than ours.

Any acquisitions, partnerships or joint ventures that we may enter into could disrupt our business and harm our financial condition.

Acquisitions, partnerships and joint ventures are part of our growth strategy. We evaluate, and expect in the future to evaluate, potential strategic acquisitions of, and partnerships or joint ventures with, complementary businesses, services or technologies. We may not be successful in identifying acquisition, partnership and joint venture targets. In addition, we may not be able to successfully finance or integrate any businesses, services or technologies that we acquire or with which we form a partnership or joint venture, and we may lose merchants as a result of any acquisition, partnership or joint venture. Furthermore, the integration of any acquisition, partnership or joint venture may divert management’s time and resources from our core business and disrupt our operations. Certain acquisitions, partnerships and joint ventures we may enter into may prevent us from competing for certain clients or in certain lines of business, and may lead to a loss of clients. We may spend time and money on projects that do not increase our revenue. To the extent we pay the purchase price of any acquisition in cash, it would reduce our cash reserves, and to the extent the purchase price is paid with our common shares, it could be dilutive to our shareholders. To the extent we pay the purchase price with proceeds from the incurrence of debt, it would increase our level of indebtedness and could negatively affect our liquidity and restrict our operations. Our competitors may be willing or able to pay more than us for acquisitions, which may cause us to lose certain acquisitions that we would otherwise desire to complete. We cannot ensure that any acquisition, partnership or joint venture we make will not have a material adverse effect on our business, financial condition and results of operations.

Our business depends on our ability to attract and retain highly skilled employees.

Our future success depends on our ability to identify, hire, develop, motivate, and retain highly qualified personnel for all areas of our organization, in particular, a highly experienced sales force, data scientists, and engineers. Competition for these types of highly skilled employees in Brazil is extremely intense. Trained and experienced personnel are in high demand and may be in short supply. Many of the companies with which we compete for experienced employees have greater resources than we do and may be able to offer more attractive terms of employment. In addition, we invest significant time and expense in training our employees, which increases their value to competitors that may seek to recruit them. We may not be able to attract, develop, and maintain the skilled workforce necessary to operate our business, and labor expenses may increase as a result of a shortage in the supply of qualified personnel. If we are unable to continue to attract or retain highly skilled employees, our business, results of operations, financial condition, and future prospects could be materially and adversely affected.

We may not be able to secure financing on favorable terms, or at all, to meet our future capital needs.

We have funded our operations since inception primarily through equity financings. We do not know when or if our operations will generate sufficient cash to fund our ongoing operations. In the future, we may require additional capital to respond to business opportunities, refinancing needs, challenges, acquisitions, or unforeseen circumstances and may decide to engage in equity or debt financings or enter into credit facilities for other reasons, and we may not be able to secure any such additional debt or equity financing or refinancing on favorable terms, in a timely manner, or at all. For example, disruptions in the credit markets or other factors, including the continued impact of the COVID-19 pandemic, could adversely affect the availability, diversity, cost, and terms of our funding arrangements. The broad impact of COVID-19 on the financial markets has created uncertainty and volatility in many funding markets and with many funding sources. In addition, our funding sources may reassess their exposure to our industry and either curtail access to uncommitted financing capacity, fail to renew or extend facilities, or impose higher costs to access our funding.

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Any debt financing obtained by us in the future could also include restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited.

In the future, we may also seek to further access the capital markets to obtain capital to finance growth. However, our future access to the capital markets could be restricted due to a variety of factors, including a deterioration of our earnings, cash flows, balance sheet quality, or overall business or industry prospects, adverse regulatory changes, a disruption to or volatility or deterioration in the state of the capital markets, or a negative bias toward our industry by market participants. Future prevailing capital market conditions and potential disruptions in the capital markets may adversely affect our efforts to arrange additional financing on terms that are satisfactory to us, if at all. If adequate funds are not available, or are not available on acceptable terms, we may not have sufficient liquidity to fund our operations, make future investments, take advantage of acquisitions or other opportunities, or respond to competitive challenges and this, in turn, could adversely affect our ability to advance our strategic plans. In addition, if the capital and credit markets experience volatility, and the availability of funds is limited, third parties with whom we do business may incur increased costs or business disruption and this could adversely affect our business relationships with such third parties, which in turn could have a material adverse effect on our business, results of operations, financial condition, cash flows, and future prospects.

Real or perceived software errors, failures, bugs, defects, or outages could adversely affect our business, results of operations, financial condition, and future prospects.

Our platform and our internal systems rely on software that is highly technical and complex. In addition, our platform and our internal systems depend on the ability of such software to store, retrieve, process, and manage large amounts of data. As a result, undetected errors, failures, bugs, or defects may be present in such software or occur in the future in such software, including open source software and other software we license in from third parties, especially when updates or new products or services are released.

Any real or perceived errors, failures, bugs, or defects in the software may not be found until our consumers use our platform and could result in outages or degraded quality of service on our platform that could adversely impact our business (including through causing us not to meet contractually required service levels), as well as negative publicity, loss of or delay in market acceptance of our products and services, and harm to our brand or weakening of our competitive position. In such an event, we may be required, or may choose, to expend significant additional resources in order to correct the problem. Any real or perceived errors, failures, bugs, or defects in the software we rely on could also subject us to liability claims, impair our ability to attract new consumers, retain existing consumers, or expand their use of our products and services, which would adversely affect our business, results of operations, financial condition, and future prospects.

Real or perceived inaccuracies in our key business metrics may harm our reputation and negatively affect our business.

We track certain key business metrics, such as total payment volume, active users and active transacting users, with internal systems and tools that are not independently verified by any third party. While the metrics presented in this prospectus are based on what we believe to be reasonable assumptions and estimates, our internal systems and tools have a number of limitations, and our methodologies for tracking these metrics may change over time. In addition, limitations or errors with respect to how we measure data or with respect to the data that we measure may affect our understanding of certain details of our business, which could affect our long-term strategies. If the internal systems and tools we use to track these metrics understate or overstate performance or contain algorithmic or other technical errors, the key operating metrics we report may not be accurate. If investors do not perceive our operating metrics to be accurate, or if we discover material inaccuracies with respect to these figures, our reputation may be significantly harmed, and our results of operations and financial condition could be adversely affected.

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We have identified material weaknesses in our internal control over financial reporting and if we fail to establish and maintain effective internal controls over financial reporting we may be unable to accurately report our results of operations, meet our reporting obligations and/or prevent fraud.

Prior to this offering, we were a private company with limited accounting resources and processes necessary to address our internal control over financial reporting and procedures. Our management has not completed an assessment of the effectiveness of our internal control over financial reporting. In connection with the audit of our financial statements for the years ended December 31, 2020 and 2019, we identified a number of material weaknesses related to controls around the financial reporting process, including IT related controls, the calculation of EPS, the identification and disclosure of related party transactions and the procedures existent to maintain formal accounting policies, processes and controls to analyze, account for and disclose complex transactions.

 We plan to adopt several measures that will improve our internal control over financial reporting, including: (1) hiring experienced personnel within our accounting and finance team; (2) implementing a new enterprise resource planning (ERP) system; (3) developing data science and software solutions to improve and escalate our reconciliation processes and procedures; and (4) improving of our internal controls to provide additional levels of review and enhanced documentation. However, we cannot assure you that our efforts will be effective or prevent any future material weakness or significant deficiency in our internal control over financial reporting.

We will be a public company in the United States subject to the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, after the completion of this offering. Section 404 of the Sarbanes-Oxley Act requires that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F subject to phase-in accommodations for newly-listed companies. In addition, once we cease to be an “emerging growth company” as such term is defined in the JOBS Act, which may be up to five full fiscal years following the date of this offering, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.

During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, we may identify other weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could, in turn, limit our access to capital markets, harm our results of operations, and lead to a decline in the trading price of our Class A common shares. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions.

The novel coronavirus, or COVID-19, outbreak could materially and adversely affect our business, financial condition and results of operations.

The novel strain of the coronavirus identified in late 2019 has spread globally, and the World Health Organization characterized the outbreak as a pandemic in March 2020. The outbreak has resulted in government authorities and businesses throughout the world implementing numerous measures intended to contain and limit the spread of COVID-19, including travel bans and restrictions, quarantines, shelter-in-place and lock-down orders, and business limitations and shutdowns. In Brazil, some states and municipalities followed such steps and took measures to prevent or delay the spread of the disease, such as restrictions on circulation and social distancing, which resulted

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in the closure of shopping malls, areas of major circulation, parks and other public spaces. In addition, these measures have affected the behavior of the general population, resulting in a sharp decrease or even a halt in the activities of companies in various sectors, as well as in a drastic reduction in consumption.

The COVID-19 outbreak has adversely impacted and is likely to further adversely impact the operations of our customers, suppliers, vendors and other business partners, and may adversely impact our results of operations in the future. Commerce in Brazil may be adversely impacted by the measures described above, which are intended to contain and limit the outbreak’s spread. While many of these mitigation measures are gradually being lifted, to the extent they may remain in place or are reinstated for significant periods of time, they may adversely affect our business, financial condition and results of operations. In particular, we have experienced and may continue to experience adverse financial impacts from a number of operational factors, including, but not limited to, the following:

•        Merchants selling goods or services in advance of the date of their delivery or experiencing bankruptcy, insolvency, business failure, or other business interruption, which could result in our becoming liable to the buyers of such goods or services, through chargebacks on payment cards used by customers to fund their payments;

•        Increased cybersecurity and payment fraud risk related to COVID-19, as cybercriminals attempt to profit from the disruption in light of increased online banking, e-commerce, and other online activity; and

•        An increased volume of unanticipated customer requests for support (resulting in increased volume to our customer support and operations centers) and regulatory requests for information and support or additional regulatory requirements, which could require additional resources and costs to address.

While the current macroeconomic environment as a result of the COVID-19 outbreak has adversely impacted general consumer and merchant spending with a more pronounced impact on travel and events, the spread of COVID-19 has also accelerated the shift from in-store shopping and traditional in-store payment methods (e.g., credit cards, debit cards, cash) towards e-commerce and digital payments and resulted in increased customer demand for safer payment and delivery solutions (e.g. contactless payment methods, buy online and pick up in store) and a significant increase in online spending that have historically had a strong in-store presence. On balance, we believe that our business has benefited from these behavioral shifts, including a significant net increase in new active user accounts and payments volume. To the extent that consumer preferences revert to pre-COVID-19 behaviors as mitigation measures to limit the spread of COVID-19 are lifted or relaxed, our business, financial condition, and results of operations could be adversely impacted. In addition, in March 2020, the Brazilian government passed an economic stimulus package that included providing vulnerable populations with emergency financial relief. Our platform served as a conduit through which users were able to obtain these relief funds. This government initiative increased our number of active users and active transacting users in 2020 by approximately 3.6 million and significantly increased our aggregate user account balances. These users may not remain active over time. In addition, more than 5.8 million users, including new users and existing users, received emergency COVID-19 relief through our application. Moreover, we recorded a R$27.6 million increase in our total revenue and income in 2020 from debit card fees in connection with payments made to users under the Brazilian government’s COVID-19 emergency assistance program during 2020. As this program was terminated by the Brazilian government in 2020, we do not anticipate that we will generate any additional revenue from this program in 2021 or beyond. However, on March 18, 2021, the Brazilian government approved additional direct emergency aid to certain individuals, ranging from R$150 to R$375 per family. The total amount of this new round of emergency aid is estimated at R$44 billion. There can be no assurance that our platform will be used again as a conduit for transferring relief funds.

The COVID-19 outbreak has required and is likely to continue to require significant management attention, substantial investments of time and resources across our enterprise, and increased costs to effectively manage our operations. The spread of COVID-19 has caused us to make significant modifications to our business practices, including enabling most of our workforce to work from home, establishing strict health and safety protocols for our offices, restricting physical participation in meetings, events, and conferences and imposing restrictions on employee travel. The significant increase in the number of our employees who are working remotely as a result of the outbreak, and an extended period of remote work arrangements and subsequent reintroduction into the workplace could introduce operational risk, increase cybersecurity risk, strain our business continuity plans, negatively impact productivity, give rise to claims by employees, and impair our ability to manage our business or otherwise

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adversely affect our business. We may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, and business partners. There is no certainty that such measures will be sufficient to mitigate the risks posed by COVID-19 or will otherwise be satisfactory to government authorities. In addition, new strains of the COVID-19 virus have been identified that are considered to be more contagious and potentially more infectious, posing a serious additional public health threat.

There are no comparable recent events that provide guidance as to the effect the spread of COVID-19 as a global pandemic may have, and as a result, the ultimate impact of the outbreak is highly uncertain and subject to change. The extent to which the COVID-19 pandemic impacts our business, financial condition and results of operations will depend on future developments, which are highly uncertain, difficult to predict and subject to change, including, but not limited to, the duration, scope, severity, and geographic spread of the outbreak, actions taken to contain COVID-19 or treat its impact, measures taken by various governmental authorities in response to the outbreak (such as continued and/or new quarantines, mask and social distancing requirements, and travel restrictions), geographic variation in how Brazilian states are handling the outbreak and how quickly and to what extent normal economic and operating conditions could potentially resume. While we do not yet know the full extent of the impacts on our business, financial condition, and results of operations, or the global economy as a whole, these impacts, individually or collectively, could have a material adverse impact on our business, financial condition and results of operations. In addition, the impact of COVID-19 may heighten or exacerbate many of the other risks discussed in “— Risk Factors”, any of which could have a material impact on us.

Our holding company structure makes us dependent on the operations of our subsidiaries.

We are a Cayman Islands exempted company with limited liability. Our material assets are our direct and indirect equity interests in our subsidiaries. We are, therefore, dependent upon payments, dividends and distributions from our subsidiaries for funds to pay our holding company’s operating and other expenses and to pay future cash dividends or distributions, if any, to holders of our Class A common shares, and we may have tax costs in connection with any dividend or distribution. Furthermore, exchange rate fluctuation will affect the U.S. dollar value of any distributions our subsidiaries make with respect to our equity interests in those subsidiaries. See “— Risks Relating to Brazil — Exchange rate instability may have adverse effects on the Brazilian economy, us and the price of our Class A common shares” and “Dividends and Dividend Policy.”

We have relevant transactions with related parties.

We engage in, and expect from time to time in the future to engage in, commercial and financial transactions with our shareholders and affiliates. During the period covered by the financial statements included in this prospectus, we have engaged in transactions with related parties (including with the current controlling shareholder of PicPay Brazil) that have had a material impact on our results of operations and financial position and that others may not consider to be on market terms. For more information, see “Related Party Transactions.” If we are unable to engage in transactions with our shareholders and affiliates on an arms’ length basis, our results of operations and financial condition may be adversely impacted. Future conflicts of interests may arise between us and any of our affiliates, or among our affiliates, which may not be resolved in our favor.

Unauthorized disclosure, destruction or modification of data, through cybersecurity breaches, computer viruses or otherwise or disruption of our services could expose us to liability, protracted and costly litigation and damage our reputation.

Our business involves the collection, storage, processing and transmission of users’ personal data, including names, addresses, identification numbers, credit or debit card numbers and expiration dates and bank account numbers. An increasing number of organizations, including large merchants and businesses, other large technology companies, financial institutions and government institutions, have disclosed breaches of their information technology systems, some of which have involved sophisticated and highly targeted attacks, including on portions of their websites or infrastructure. Although we have not experienced any significant cyber security attacks that have caused information leakage or operational losses, we could also be subject to breaches of security by hackers. Threats may derive from human error, fraud or malice on the part of employees or third parties, or may result from accidental technological failure. Concerns about security are increased when we transmit information.

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Electronic transmissions can be subject to attack, interception or loss. Also, computer viruses and malware can be distributed and spread rapidly over the internet and could infiltrate our or third party systems, which can impact the confidentiality, integrity and availability of information, and the integrity and availability of our products, services and systems, among other effects. Denial of service or other attacks could be launched against us for a variety of purposes, including interfering with our services or creating a diversion for other malicious activities. These types of actions and attacks could disrupt our delivery of products and services or make them unavailable, which could damage our reputation, force us to incur significant expenses in remediating the resulting impacts, expose us to uninsured liability, subject us to lawsuits, fines or sanctions, distract our management or increase our costs of doing business.

In the scope of our activities, we share information with third parties, including commercial partners, third-party service providers and other agents, which we refer to collectively as “associated participants,” who collect, process, store and transmit sensitive data. We may be held responsible for any failure or cybersecurity breaches attributed to these third parties insofar as they relate to the information we share with them. The loss, destruction or unauthorized modification of data of our users by us or our associated participants or through systems we provide could result in significant fines, sanctions and proceedings or actions against us by governmental bodies or third parties, which could have a material adverse effect on our business, financial condition and results of operations. Any such proceeding or action, and any related indemnification obligation, could damage our reputation, force us to incur significant expenses in defense of these proceedings, distract our management, increase our costs of doing business or result in the imposition of financial liability.

Our encryption of data and other protective measures and associated costs, such as firewall, security operation center infrastructure, virtual private network and third party services, may not prevent unauthorized access or use of sensitive data. A breach of our system or that of one of our associated participants may subject us to material losses or liability, including assessments and claims for unauthorized purchases with misappropriated credit, debit or card information, impersonation or other similar fraud claims. A misuse of such data or a cybersecurity breach could harm our reputation and deter merchants from using electronic payments generally and our products and services specifically, thus reducing our revenue. In addition, any such misuse or breach could cause us to incur costs to correct the breaches or failures, expose us to uninsured liability, increase our risk of regulatory scrutiny, subject us to lawsuits and result in the imposition of material penalties and fines under applicable laws or regulations. In addition, a significant cybersecurity breach of our systems or communications could result in the loss of Central Bank authorization to operate as a payment institution (instituição de pagamento) in Brazil, which could materially impede our ability to conduct business. We do not maintain insurance policies specifically for cyber-attacks.

We cannot guarantee that there are written agreements in place with every associated participant or that such written agreements will prevent the unauthorized use, modification, destruction or disclosure of data or enable us to obtain reimbursement from associated participants in the event we should suffer incidents resulting in unauthorized use, modification, destruction or disclosure of data. In addition, many of our associated participants are small- and medium-sized agents that have limited competency regarding data security and handling requirements and may thus experience data losses. Any unauthorized use, modification, destruction or disclosure of data could result in protracted and costly litigation, which could have a material adverse effect on our business, financial condition and results of operations.

Cybersecurity incidents are increasing in frequency and evolving in nature and include, but are not limited to, installation of malicious software, unauthorized access to data and other electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise protected information and the corruption of data. Given the unpredictability of the timing, nature and scope of information technology disruptions, there can be no assurance that the procedures and controls we employ will be sufficient to prevent security breaches from occurring, and we could be subject to manipulation or improper use of our systems and networks or financial losses from remedial actions, any of which could have a material adverse effect on our business, financial condition and results of operations.

Further, as a result of the COVID-19 pandemic, we have increased the number of our employees working remotely. This may cause increases in the unavailability of our systems and infrastructure, interruption of telecommunication services, generalized system failures and heightened vulnerability to cyberattacks. Accordingly, our ability to conduct our business may be adversely impacted.

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Our insurance policies may not be sufficient to cover all claims.

Our insurance policies may not adequately cover all risks to which we are exposed. A significant claim not covered by our insurance, in full or in part, may result in significant expenditures by us. Moreover, we may not be able to maintain insurance policies in the future at reasonable costs or on acceptable terms or to maintain insurance policies at all, which may adversely affect our business and the trading price of our Class A common shares.

We are subject to reputational risk in connection with U.S. and Brazilian civil and criminal actions and investigations involving certain members of the Batista family, who will indirectly own a material portion of our Class B common shares. Damage to our reputation and image may materially adversely impact our business and prospects.

Our credibility with the market is of great importance to enable us to conduct our business, and to attract and retain our users, employees and investors. Our credibility may be adversely affected by several factors, such as poor customer service, improper business with users, suppliers or partners, non-compliance with legal and regulatory obligations, failures in risk management, worsening of financial results, negative publicity (even if inaccurate), actions contrary to health or work safety, adverse social and environmental events, discriminatory practices or illegal acts, corruption or unethical behavior by employees, directors, officers, controlling shareholders, partners or suppliers, among other factors. The negative impact on our reputation and image may have a material adverse effect on our business, results of operations, financial condition and future prospects.

Following the consummation of this offering, J&F Participações will indirectly own 100% of our Class B common shares and        % of the voting power of our company. J&F Participações is beneficially owned by the Batista family. Messrs. Joesley Mendonça Batista and Wesley Mendonça Batista each individually own 24.999998% of the outstanding common shares and 50% of the outstanding preferred shares of J&F Participações. J&F Participações is controlled pursuant to a shareholders’ agreement by Messrs. José Batista Sobrinho and José Batista Júnior, who own the remaining common shares of J&F Participações. Messrs. José Batista Sobrinho and José Batista Júnior are the father and brother, respectively, of Messrs. Joesley Mendonça Batista and Wesley Mendonça Batista.

On May 3, 2017, Messrs. Joesley Mendonça Batista and Wesley Mendonça Batista entered into cooperation agreements (acordos de colaboração), or the Cooperation Agreements, with the Brazilian Office of the Prosecutor General (Procuradoria-Geral da República) in connection with certain illicit conduct by J&F Investimentos S.A., or J&F Investimentos, a Brazilian holding company which is jointly controlled and equally and indirectly owned by Messrs. Joesley Mendonça Batista and Wesley Mendonça Batista, and such individuals acting in their capacity as executives of J&F Investimentos. The details of such illicit conduct are set forth in separate annexes to the Cooperation Agreements, and include admissions of improper payments to politicians and political parties in Brazil during a ten-year period in exchange for receiving, or attempting to receive, favorable treatment for certain group companies in Brazil. The J&F Participações shareholders’ agreement contains customary rights of first refusal, tag along rights and drag along rights that could result in Messrs. Joesley Mendonça Batista and Wesley Mendonça Batista, subject to prior approval by the Central Bank of Brazil, owning a controlling interest in J&F Participações, which could result in them gaining effective voting control over us. See “Principal Shareholders — Shareholders’ Agreement of J&F Participações.”

On June 5, 2017, J&F Investimentos entered into a leniency agreement, or the Leniency Agreement, with the Brazilian Federal Prosecutor (Ministério Público Federal) whereby J&F Investimentos accepted responsibility for the conduct that was described in the annexes to the Cooperation Agreements. In connection with the Leniency Agreement, J&F Investimentos has agreed to pay a fine of R$8.0 billion (US$1.5 billion as of December 31, 2020) and to contribute an additional R$2.3 billion (US$442.6 million as of December 31, 2020) to social projects in Brazil, adjusted for inflation, over a 25-year period. Various proceedings by Brazilian governmental authorities, including criminal proceedings, remain pending against J&F Investimentos and certain of its former or current officers seeking to invalidate the Cooperation Agreements and/or impose more severe penalties for additional alleged illicit conduct that was not disclosed in the annexes to the Cooperation Agreements. We acceded to the Leniency Agreement in our capacity as an affiliated company of J&F Investimentos in respect of certain compliance-related obligations thereunder that we agreed to comply with.

On October 14, 2020, J&F Investimentos, JBS S.A. (an affiliate of J&F Investimentos controlled by Messrs. Joesley Mendonça Batista and Wesley Mendonça Batista), and Messrs. Joesley Mendonça Batista and Wesley Mendonça Batista entered into a settlement agreement, or the Settlement, with the SEC. We were not parties to the

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Settlement, were not a respondent in the related proceedings, and we are not required to make any related payment. Under the Settlement, the SEC issued an Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, or the SEC Order, finding securities law violations by such parties that resulted in Pilgrim’s Pride Corporation, an affiliate of J&F Investimentos and JBS S.A, failing to maintain accurate books and records and internal accounting controls. According to the SEC Order, the violations, which related to certain intercompany transactions from 2009 to 2015, were unbeknownst to the management of Pilgrim’s Pride Corporation.

On October 14, 2020, J&F Investimentos reached an agreement, or the J&F Plea Agreement, with the U.S. Department of Justice, or DOJ, regarding violations stemming from the same facts and conduct that were the subject of the Leniency Agreement and the Cooperation Agreements (described above). Pursuant to the J&F Plea Agreement, J&F Investimentos pled guilty to one count of conspiracy to violate the U.S. Foreign Corrupt Practices Act. The J&F Plea Agreement imposed a fine of US$256.5 million, and J&F Investimentos was required to make a payment of US$128.2 million under the J&F Plea Agreement (due to J&F Investimentos receiving a 50% credit for amounts paid to Brazilian authorities). We are not parties to the J&F Plea Agreement and will not bear any liabilities arising from it. The J&F Plea Agreement resolved the U.S. criminal legal exposure of J&F Investimentos and all its affiliates related to the conduct that was the subject of the Leniency Agreement and the Cooperation Agreements.

To our knowledge, Messrs. Joesley Mendonça Batista and Wesley Mendonça Batista, JBS S.A. and J&F Investimentos S.A. are in compliance with all of the financial and non-financial obligations pursuant to the J&F Plea Agreement and the SEC Order. A breach of any of these agreements entered into with the U.S. or Brazilian governmental authorities could have an indirect adverse effect on us. In addition, these agreements do not prohibit Mr. Joesley Mendonça Batista or Mr. Wesley Mendonça Batista from serving as an officer of PicPay Brazil with prior approval of the Central Bank of Brazil, or as a member of our board of directors. Messrs. Joesley Mendonça Batista and Wesley Mendonça Batista are also currently subject to ongoing investigations by the Brazilian Securities Commission (Comissão de Valores Mobiliários) (CVM) and criminal proceedings for alleged violations of Brazilian securities and corporate law.

We cannot guarantee that negative news and publicity (whether or not factually accurate) will not be released, including in respect of the Cooperation Agreements, Leniency Agreement, the SEC Order, the J&F Plea Agreement or the CVM investigations of Messrs. Joesley Mendonça Batista and Wesley Mendonça Batista, and, in these cases, our reputation and image may be damaged. We also cannot be certain that we will not need to take any contingency actions in case of a reputational crisis and that any of these actions will be effective or sufficient. Actions or allegations (whether grounded or unfounded) regarding actions taken by third parties, including our controlling shareholders, suppliers or partners, such as illegal acts or corruption, or actions contrary to health or work safety, as well as any socio-environmental regulations, may materially adversely impact our reputation and image with our users, suppliers and partners and the market, which may have a material adverse effect on our business, results of operations, financial condition and future prospects.

We rely on third parties maintaining open marketplaces to distribute our mobile application. If such third parties interfere with the distribution of our platform, our business would be adversely affected.

We rely on third parties maintaining open marketplaces, including the Apple App Store and Google Play, which make our mobile application available for download. We cannot assure you that the marketplaces through which we distribute our mobile application will maintain their current structures or that such marketplaces will not charge us fees to list our application for download. We are also dependent on these third-party marketplaces to enable us and our users to timely update our mobile application, and to incorporate new features, integrations, and capabilities.

In addition, Apple Inc. and Google, among others, for competitive or other reasons, could stop allowing or supporting access to our mobile application through their products, could allow access for us only at an unsustainable cost, or could make changes to the terms of access in order to make our mobile application less desirable or harder to access.

If we lose key personnel our business, financial condition and results of operations may be adversely affected.

We are dependent upon the ability and experience of a number of key personnel who have substantial experience with our operations, the rapidly changing payment processing industry and the markets in which we offer our services. Many of our key personnel have worked for us for a significant amount of time or were recruited by

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us specifically due to their industry experience. It is possible that the loss of the services of one or a combination of our senior executives or key managers could have a material adverse effect on our business, financial condition and results of operations.

Requirements associated with being a public company in the United States will require significant company resources and management attention.

After the completion of this offering, we will become subject to certain reporting requirements of Exchange Act and the other rules and regulations of the SEC and Nasdaq. We will also be subject to various other regulatory requirements, including the Sarbanes-Oxley Act. We expect these rules and regulations to increase our legal, accounting and financial compliance costs and to make some activities more time-consuming and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantial costs to maintain the same or similar coverage. New rules and regulations relating to information disclosure, financial reporting and controls and corporate governance, which could be adopted by the SEC or other regulatory bodies or exchange entities from time to time, could result in a significant increase in legal, accounting and other compliance costs and make certain corporate activities more time-consuming and costly, which could materially affect our business, financial condition and results of operations. These rules and regulations may also make it more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers.

These new obligations will also require substantial attention from our senior management and could divert their attention away from the day-to-day management of our business. Given that most of the individuals who now constitute our management team have limited experience managing a publicly traded company and complying with the increasingly complex laws pertaining to public companies, initially, these new obligations could demand even greater attention. These cost increases and the diversion of management’s attention could materially and adversely affect our business, financial condition and operation results.

If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, the price of our Class A common shares and our trading volume could decline.

The trading market for our Class A common shares will depend in part on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research on our company. If no or too few securities or industry analysts commence coverage of our company, the trading price for our Class A common shares would likely be negatively affected. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our Class A common shares or publish inaccurate or unfavorable research about our business, the price of our Class A common shares would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our Class A common shares could decrease, which might cause the price of our Class A common shares and trading volume to decline.

We may need to raise additional capital in the future by issuing securities or may enter into corporate transactions with an effect similar to a merger, which may dilute your interest in our share capital and affect the trading price of our Class A common shares.

We may need to raise additional funds to grow our business and implement our growth strategy through public or private issuances of common shares or securities convertible into, or exchangeable for, our common shares, which may dilute your interest in our share capital or result in a decrease in the market price of our common shares. In addition, we may also enter into mergers or other similar transactions in the future, which may dilute your interest in our share capital or result in a decrease in the market price of our Class A common shares. Any fundraising through the issuance of shares or securities convertible into or exchangeable for shares, or the participation in corporate transactions with an effect similar to a merger, may dilute your interest in our capital stock or result in a decrease in the market price of our Class A common shares.

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An occurrence of a natural disaster, widespread health epidemic or other outbreaks could have a material adverse effect on our business, financial condition and results of operations.

Our business could be materially and adversely affected by natural disasters, such as fires or floods, the outbreak of a widespread health epidemic, or other events, such as wars, acts of terrorism, environmental accidents, power shortages or communication interruptions. The occurrence of a disaster or similar event could materially disrupt our business and operations. These events could also cause us to close our operating facilities temporarily, which would severely disrupt our operations and have a material adverse effect on our business, financial condition and results of operations. In addition, our revenues could be materially reduced to the extent that a natural disaster, health epidemic or other major event harms the economy of Brazil. Our operations could also be severely disrupted if our customers, suppliers, vendors and other business partners were affected by natural disasters, health epidemics or other major events.

Risks Relating to Legal and Regulatory Matters

Our business is subject to extensive government regulation and oversight in Brazil and our status under these regulations may change. Violation of or compliance with present or future regulation could be costly, expose us to substantial liability and force us to change our business practices, any of which could seriously harm our business and results of operations.

As a payment institution (instituição de pagamento) in Brazil, our business is subject to Brazilian laws and regulations relating to electronic payments in Brazil, comprised of Brazilian Federal Law No. 12,865/13 and related rules and regulations.

Failure to comply with the requirements of the Brazilian legal and regulatory framework, including without limitation any failure to timely make the required filings with the Brazilian Central Bank, may prevent us from carrying out our regulated activities, and may: (1) require us to pay substantial fines (including per transaction fines) and disgorgement of our profits; (2) require us to change our business practices; or (3) subject us to insolvency proceedings such as an intervention by the Brazilian Central Bank, as well as the out-of-court liquidation of PicPay, and any of our subsidiaries to whom licenses may be granted in the future. Any disciplinary or punitive action by our regulators or failure to obtain required operating licenses could seriously harm our business and results of operations.

In addition, we offer installment payment solutions to our users through the investment fund FIDC PicPay I, which acts as a capital market securitization vehicle that purchases receivables before their original payment date. FIDC PicPay I is not a financial institution and, thus, it is not authorized by the Brazilian Central Bank to grant loans with interest rates above the limits set by Decree No. 22,623, of April 7, 1933 (the Brazilian Usury Law). In case the discount rates applicable to the purchase of receivables by FIDC PicPay I are considered as “interest” under Brazilian law, the limits set by the Brazilian Usury Law would apply to these rates. Any limitation to the discount rates applicable to the purchase of receivables by FIDC PicPay I could negatively impact our business, financial condition and results of operations.

Furthermore, as part of the ongoing discussions in Brazil related to non-financial companies providing financial services, current regulation may evolve and create additional rules and obligations to payment institutions payment scheme settlor and to the market in general.

For further information regarding these regulatory matters, see “Regulatory Overview.”

We are subject to costs and risks associated with increased or changing laws and regulations affecting our business, including those relating to the sale of consumer products. Specifically, developments in data protection and privacy laws could harm our business, financial condition or results or operations.

We operate in a complex regulatory and legal environment that exposes us to compliance and litigation risks that could materially affect our results of operations. These laws may change, sometimes significantly, as a result of political, economic or social events. Some of the federal, state or local laws and regulations in Brazil that affect us include: those relating to consumer products, product liability or consumer protection; those relating to the manner

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in which we advertise, market or sell products; labor and employment laws, including wage and hour laws; tax laws or interpretations thereof; bank secrecy laws, data protection and privacy laws and regulations; and securities and exchange laws and regulations. For instance, data protection and privacy laws are developing to take into account the changes in cultural and consumer attitudes towards the protection of personal data. There can be no guarantee that we will have sufficient financial resources to comply with any new regulations or successfully compete in the context of a shifting regulatory environment.

In September 2020, Brazilian Federal Law No. 13.709/2018, called the Brazilian General Data Protection Law (Lei Geral de Proteção de Dados), or the LGPD, came into effect establishing general principles, obligations and detailed rules for the collection, use, processing and storage of personal data that affects all economic sectors, including the relationship between customers and suppliers of goods and services, employees and employers and other relationships in which personal data is collected, whether in a digital or physical environment. All legal entities are required to adapt their data processing activities to these new rules. The application of penalties provided in the LGPD will become effective on August 1, 2021. Any additional privacy laws or regulations enacted or approved in Brazil could seriously harm our business, financial condition, or results of operations. Accordingly, our personal data processing activities and digital advertising practices may change significantly, which could result in additional costs for us due to the requirements to conform our practices to the provisions set forth in the LGPD.

In particular, as we seek to build a trusted and secure platform for commerce, and as we expand our network of sellers and buyers and facilitate their transactions and interactions with one another, we will increasingly be subject to laws and regulations relating to the collection, use, retention, security, and transfer of information, including the personally identifiable information of our employees and our merchants and their customers. As with the other laws and regulations noted above, these laws and regulations may be interpreted and applied differently over time and from jurisdiction to jurisdiction, and it is possible they will be interpreted and applied in ways that will materially and adversely affect our business. Any failure, real or perceived, by us to comply with our posted privacy policies or with any regulatory requirements or orders or other local, state, federal, or international privacy or consumer protection-related laws and regulations could cause sellers or their customers to reduce their use of our products and services and could materially and adversely affect our business.

Changes in tax laws, tax incentives, benefits or differing interpretations of tax laws may adversely affect our results of operations.

Changes in tax laws, regulations, related interpretations and tax accounting standards in Brazil, the Cayman Islands or the United States may result in a higher tax rate on our earnings, which may significantly reduce our profits and cash flows from operations. For example, in 2015 the Brazilian government increased the rate of PIS/COFINS tax (which is a tax levied on revenues) from 0% to 4.65% on financial income realized by Brazilian companies that are taxed under the non-cumulative regime (which is the tax regime that applies to us). In addition, our results of operations and financial condition may decline if certain tax incentives are not retained or renewed. For example, Brazilian Federal Law No. 11,196 currently grants tax benefits to companies that invest in research and development, provided that some requirements are met, which significantly reduces our annual income tax expense. If the taxes applicable to our business increase or any tax benefits are revoked and we cannot alter our cost structure to pass our tax increases on to clients, our financial condition, results of operations and cash flows could be seriously harmed. Our payment processing activities are also subject to a Municipal Tax on Services (Imposto Sobre Serviços), or ISS. Any increases in ISS rates would also harm our profitability.

In addition, Brazilian government authorities at the federal, state and local levels are considering changes in tax laws in order to cover budgetary shortfalls resulting from the recent economic downturn in Brazil. If these proposals are enacted they may harm our profitability by increasing our tax burden, increasing our tax compliance costs, or otherwise affecting our financial condition, results of operations and cash flows. Certain tax rules in Brazil, particularly at the local level, may change without notice. We may not always be aware of all such changes that affect our business and we may therefore fail to pay the applicable taxes or otherwise comply with tax regulations, which may result in additional tax assessments and penalties for our company.

At the municipal level, the Brazilian government enacted Supplementary Law No. 157/16, which imposed changes regarding the tax collection applied to the rendering of our services. These changes created new obligations, since taxes will now be due in the municipality in which the acquirer of our services is located rather than in the municipality in which the service provider’s facilities are located. This obligation took force in January 2018, but has been delayed by Direct Unconstitutionality Action No. 5835, or ADI, filed by taxpayers. The ADI challenges

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Supplementary Law No. 157/16’s constitutionality before the Supreme Court, arguing that the new legislation would adversely affect companies’ activities due to the increase of costs and bureaucracy related to the ISS payment to several Municipalities and the compliance with tax reporting obligations connected therewith. As a result, the Supreme Court granted an injunction to suspend Supplementary Law No. 157/16’s enforcement. A final decision on this matter is currently pending. Recently, the Brazilian government enacted Supplementary Law No. 175/20, which, among other measures, aimed to enable the application of provisions brought by Supplementary Law No. 157/16. There could be a discussion on whether ADI No. 5835 would have lost its object upon the enactment of Supplementary Law No. 175/20, but the Supreme Court has not taken a position on this matter yet.

Furthermore, we are subject to tax laws and regulations that may be interpreted differently by tax authorities and us. The application of indirect taxes, such as sales and use tax, value-added tax, provincial taxes, goods and services tax, business tax and gross receipt tax, to businesses like ours is a complex and evolving issue. Significant judgment is required to evaluate applicable tax obligations. In many cases, the ultimate tax determination is uncertain because it is not clear how existing statutes apply to our business. One or more states or municipalities, the federal government or other countries may seek to challenge the taxation or procedures applied to our transactions imposing the charge of taxes or additional reporting, record-keeping or indirect tax collection obligations on businesses like ours. New taxes could also require us to incur substantial costs to capture data and collect and remit taxes. If such obligations were imposed, the additional costs associated with tax collection, remittance and audit requirements could have a material adverse effect on our business and financial results.

We are subject to anti-corruption, anti-bribery and anti-money laundering laws and regulations.

We operate in a jurisdiction that has a high risk for corruption and we are subject to anti-corruption, anti-bribery and anti-money laundering laws and regulations, including the Brazilian Federal Law No. 12,846/2013, or the Clean Company Act, and the United States Foreign Corrupt Practices Act of 1977, as amended, or the FCPA. Both the Clean Company Act and the FCPA impose liability against companies who engage in bribery of government officials, either directly or through intermediaries. We have a compliance program that is designed to manage the risks of doing business in light of these new and existing legal and regulatory requirements. Violations of the anti-corruption, anti-bribery and anti-money laundering laws and regulations could result in criminal liability, administrative and civil lawsuits, significant fines and penalties, forfeiture of significant assets, as well as reputational harm.

Regulators may increase enforcement of these obligations, which may require us to make adjustments to our compliance program, including the procedures we use to verify the identity of our customers and to monitor our transactions. Regulators regularly reexamine the transaction volume thresholds at which we must obtain and keep applicable records or verify identities of customers and any change in such thresholds could result in greater costs for compliance. Costs associated with fines or enforcement actions, changes in compliance requirements, or limitations on our ability to grow could harm our business, and any new requirements or changes to existing requirements could impose significant costs, result in delays to planned product improvements, make it more difficult for new customers to join our network and reduce the attractiveness of our products and services.

The costs and effects of pending and future litigation, investigations or similar matters, or adverse facts and developments related thereto, could materially affect our business, financial position and results of operations.

We may be in the future, party to significant legal, arbitration and administrative investigations, inspections and proceedings arising in the ordinary course of our business or from extraordinary corporate, tax or regulatory events, involving our clients, suppliers, customers, as well as environmental, competition, government agencies and tax authorities, particularly with respect to civil, tax and labor claims. Our indemnities may not cover all claims that may be asserted against us, and any claims asserted against us, regardless of merit or eventual outcome, may harm our reputation. Furthermore, there is no guarantee that we will be successful in defending ourselves in pending or future litigation or similar matters under various laws. Should the ultimate judgments or settlements in any pending litigation or future litigation or investigation significantly exceed our indemnity rights, they could have a material adverse effect on our business, financial condition and results of operations and the price of our Class A common shares. Further, even if we adequately address issues raised by an inspection conducted by an agency or successfully defend our case in an administrative proceeding or court action, we may have to set aside significant financial and management resources to settle issues raised by such proceedings or to those lawsuits or claims, which could adversely affect our business. See “Business — Legal Proceedings.”

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We may not be able to successfully manage our intellectual property and may be subject to infringement claims.

We rely on a combination of contractual rights, trademarks and trade secrets to establish and protect our proprietary technology. Third parties may challenge, invalidate, circumvent, infringe or misappropriate our intellectual property, or such intellectual property may not be sufficient to permit us to take advantage of current market trends or otherwise to provide competitive advantages, which could result in costly redesign efforts, discontinuance of certain service offerings or other competitive harm. Others, including our competitors, may independently develop similar technology, duplicate our services or design around our intellectual property, and in such cases, we could not assert our intellectual property rights against such parties. Further, our contractual arrangements may not effectively prevent disclosure of our confidential information or provide an adequate remedy in the event of unauthorized disclosure of our confidential information. We may have to litigate to enforce or determine the scope and enforceability of our intellectual property rights, trade secrets and know-how, which is expensive, could cause a diversion of resources and may not prove successful. Also, because of the rapid pace of technological change in our industry, aspects of our business and our services rely on technologies developed or licensed by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third parties on reasonable terms or at all. The loss of intellectual property protection, the inability to obtain third-party intellectual property or delay or refusal by relevant regulatory authorities to approve pending intellectual property registration applications could harm our business and ability to compete.

We may also be subject to costly litigation in the event our services and technology infringe upon or otherwise violate a third party’s proprietary rights. Third parties may have, or may eventually be issued, patents that could be infringed by our services or technology. Any of these third parties could make a claim of infringement against us with respect to our services or technology. We may also be subject to claims by third parties for breach of copyright, trademark, license usage or other intellectual property rights. Any claim from third parties may result in a limitation on our ability to use the intellectual property subject to these claims or could prevent us from registering our brands as trademarks. Additionally, in recent years, individuals and groups have been purchasing intellectual property assets for the sole purpose of making claims of infringement and attempting to extract settlements from companies like ours. Even if we believe that intellectual property related claims are without merit, defending against such claims is time-consuming and expensive and could result in the diversion of the time and attention of our management and employees. Claims of intellectual property infringement also might require us to redesign affected services, enter into costly settlement or license agreements, pay costly damage awards, change our brands, or face a temporary or permanent injunction prohibiting us from marketing or selling certain of our services or using certain of our brands. Even if we have an agreement for indemnification against such costs, the indemnifying party, if any in such circumstances, may be unable to uphold its contractual obligations. If we cannot or do not license the infringed technology on reasonable terms or substitute similar technology from another source, our revenue and earnings could be adversely impacted.

Risks Relating to Brazil

The Brazilian federal government has exercised, and continues to exercise, significant influence over the Brazilian economy. This involvement, as well as Brazil’s political and economic conditions, could harm us and the price of our Class A common shares.

The Brazilian federal government frequently exercises significant influence over the Brazilian economy and occasionally makes significant changes in policy and regulations. The Brazilian government’s actions to control inflation and other policies and regulations have often involved, among other measures, increases or decreases in interest rates, changes in fiscal policies, wage and price controls, foreign exchange rate controls, blocking access to bank accounts, currency devaluations, capital controls and import restrictions. We have no control over and cannot predict what measures or policies the Brazilian government may take in the future. We and the market price of our securities may be harmed by changes in Brazilian government policies, as well as general economic factors, including, without limitation:

•        growth or downturn of the Brazilian economy;

•        interest rates and monetary policies;

•        exchange rates and currency fluctuations;

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•        inflation;

•        liquidity of the domestic capital and lending markets;

•        import and export controls;

•        exchange controls and restrictions on remittances abroad;

•        modifications to laws and regulations according to political, social and economic interests;

•        fiscal policy and changes in tax laws;

•        economic, political and social instability;

•        labor and social security regulations;

•        energy and water shortages and rationing; and

•        other political, diplomatic, social and economic developments in or affecting Brazil.

Uncertainty over whether the Brazilian federal government will implement changes in policy or regulation affecting these or other factors in the future may affect economic performance and contribute to economic uncertainty in Brazil, which may have an adverse effect on us and our Class A common shares. We cannot predict what measures the Brazilian federal government will take in the face of mounting macroeconomic pressures or otherwise. Recent economic and political instability has led to a negative perception of the Brazilian economy and higher volatility in the Brazilian securities markets, which also may adversely affect us and our Class A common shares. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Significant Factors Affecting our Results of Operations.”

The ongoing economic uncertainty and political instability in Brazil may harm us and the price of our Class A common shares.

Brazil’s political environment has historically influenced, and continues to influence, the performance of the country’s economy. Political crises have affected and continue to affect the confidence of investors and the general public, which have historically resulted in economic deceleration and heightened volatility in the securities issued by Brazilian companies.

The recent economic instability in Brazil contributed to decreased market trust in the Brazilian economy and worsened the domestic political scenario. Moreover, the volatility of Brazilian markets heightened due to uncertainties related to a number of ongoing investigations of accusations of money laundering and corruption conducted by the Brazilian Federal Police and the Federal Prosecutor’s Office, including the largest investigation, known as Lava Jato. These investigations adversely affected the Brazilian economy and political scenario. As of the date of this prospectus, Jair Bolsonaro, president of Brazil, is under investigation by the Brazilian Federal Supreme Court (Supremo Tribunal Federal) for alleged misconduct. Any consequences from these investigations, including potential impeachment proceedings, may materially adversely affect the political and economic environment in Brazil and the business of companies operating in Brazil, including us.

It is unclear if and for how long the political divisions in Brazil will continue under Mr. Bolsonaro’s administration and the effects that these divisions may have on Mr. Bolsonaro’s ability to govern Brazil and implement reforms. Any continuation of these divisions could result in congressional deadlock, political unrest and massive demonstrations and/or strikes that could adversely affect our operations.

Moreover, any difficulties that the government may have to obtain majority vote in congress to implement reforms may result in congressional deadlock, political instability and massive demonstrations and/or strikes that could adversely affect us. Uncertainties in relation to the implementation by the new administration of changes relating to monetary, tax and social security policies, as well as to the legislation that must be passed to implement them, may contribute to economic instability and heighten market volatility, which may adversely affect us.

Any of the above factors may create additional political uncertainty, which could harm the Brazilian economy and, consequently, our business and the price of our Class A common shares.

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Inflation and certain measures by the Brazilian government to curb inflation have historically harmed the Brazilian economy and Brazilian capital markets, and high levels of inflation in the future could harm our business and the price of our Class A common shares.

In the past, Brazil has experienced extremely high rates of inflation. Inflation and some of the measures taken by the Brazilian government in an attempt to curb inflation have had significant negative effects on the Brazilian economy generally. Inflation, policies adopted to curb inflationary pressures and uncertainties regarding possible future government intervention have contributed to economic uncertainty and heightened volatility in the Brazilian economy and capital markets.

Brazil’s annual inflation, as measured by the general price index (Índice Geral de Preços de Mercado), or IGP-M index, was 23.14% in 2020, 7.30% in 2019 and 7.55% in 2018. Brazil’s annual inflation as measured by the consumer price index (Índice Nacional de Preços ao Consumidor), or IPCA, was 4.52% in 2020, 4.31% in 2019 and 3.75% in 2018. Brazil may experience high levels of inflation in the future and inflationary pressures may lead to the Brazilian government’s intervening in the economy and introducing policies that could harm our business and the price of our Class A common shares. In the past, the Brazilian government’s interventions included the maintenance of a restrictive monetary policy with high interest rates that restricted credit availability and reduced economic growth, causing volatility in interest rates. Recently, the SELIC rate has not varied significantly. For example, the SELIC rate in as of December 31, 2020, 2019 and 2018 was 1.9%, 4.9% and 6.4%, respectively. However, future measures taken by the Brazilian government to control inflation could include higher interest rates. Conversely, more lenient government and Brazilian Central Bank policies and interest rate decreases have triggered and may continue to trigger increases in inflation, and, consequently, growth volatility and the need for sudden and significant interest rate increases, which could negatively affect us and increase our indebtedness.

Exchange rate instability may have adverse effects on the Brazilian economy, us and the price of our Class A common shares.

The Brazilian currency has been historically volatile and has been devalued frequently over the past three decades. Throughout this period, the Brazilian government has implemented various economic plans and used various exchange rate policies, including sudden devaluations, periodic mini-devaluations (during which the frequency of adjustments has ranged from daily to monthly), exchange controls, dual exchange rate markets and a floating exchange rate system. Although long-term depreciation of the real is generally linked to the rate of inflation in Brazil, depreciation of the real occurring over shorter periods of time has resulted in significant variations in the exchange rate between the real, the U.S. dollar and other currencies. In 2020, the real depreciated by 28.5% against the U.S. dollar in comparison to December 31, 2019, and the exchange rate was R$5.197 per US$1.00 as of December 31, 2020. In 2019, the real also depreciated against the U.S. dollar in comparison to 2018 reaching R$ 4.0307 per US$1.00 as of December 31, 2019. In 2018, the real depreciated against the U.S. dollar in comparison to 2017 reaching R$3.8748 per US$1.00 as of December 31, 2018. In 2017, the real also depreciated against the U.S. dollar in comparison to 2016, reaching R$3.3080 per US$1.00 as of December 31, 2017. In 2016, the real appreciated against the U.S. dollar, reaching R$3.2591 per US$1.00 as of December 31, 2016. There can be no assurance that the real will not further depreciate against the U.S. dollar or other currencies in the future.

Depreciation of the real relative to the U.S. dollar could create inflationary pressures in Brazil and cause the Brazilian government to, among other measures, increase interest rates. Any depreciation of the real may generally restrict access to the international capital markets. It would also reduce the U.S. dollar value of our results of operations. Restrictive macroeconomic policies could reduce the stability of the Brazilian economy and harm our results of operations and profitability. In addition, domestic and international reactions to restrictive economic policies could have a negative impact on the Brazilian economy. These policies and any reactions to them may harm us by curtailing access to foreign financial markets and prompting further government intervention. Depreciation of the real relative to the U.S. dollar may also, as in the context of the current economic slowdown, decrease consumer spending, increase deflationary pressures and reduce economic growth.

On the other hand, an appreciation of the real relative to the U.S. dollar and other foreign currencies may deteriorate the Brazilian foreign exchange current accounts. We and certain of our suppliers purchase goods and services from countries outside of Brazil, and thus changes in the value of the U.S. dollar compared to other

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currencies may affect the costs of goods and services that we purchase. Depending on the circumstances, either devaluation or appreciation of the real relative to the U.S. dollar and other foreign currencies could restrict the growth of the Brazilian economy, as well as our business, results of operations and profitability.

Infrastructure and workforce deficiency in Brazil may impact economic growth and have a material adverse effect on us.

Our performance depends on the overall health and growth of the Brazilian economy. In 2020, Brazilian GDP decreased by 4.3%. However, in prior years, Brazilian GDP growth remained relatively stable, at 1.0% and 1.3% in 2019 and 2018, respectively. Growth is limited by inadequate infrastructure, including potential energy shortages and deficient transportation, logistics and telecommunication sectors, the lack of a qualified labor force, and the lack of private and public investments in these areas, which limit productivity and efficiency. Any of these factors could lead to labor market volatility and generally impact income, purchasing power and consumption levels, which could limit growth and ultimately have a material adverse effect on us.

Developments and the perceptions of risks in other countries, including other emerging markets, the United States and Europe, may harm the Brazilian economy and the price of securities issued by companies operating in Brazil, including the price of our Class A common shares.

The market for securities of companies operating in Brazil, including us, is influenced by economic and market conditions in Brazil and, to varying degrees, market conditions in other Latin American and emerging markets, as well as the United States, Europe and other countries and regions. To the extent the conditions of the global markets or economy deteriorate, the business of companies operating in Brazil may be harmed. The weakness in the global economy has been marked by, among other adverse factors, lower levels of consumer and corporate confidence, decreased business investment and consumer spending, increased unemployment, reduced income and asset values in many areas, reduction of Brazil’s growth rate, currency volatility and limited availability of credit and access to capital. Developments or economic conditions in other emerging market countries have at times significantly affected the availability of credit to Brazilian companies and resulted in considerable outflows of funds from Brazil, decreasing the amount of foreign investments in Brazil.

Crises and political instability in other emerging market countries, the United States, Europe or other countries, such as Brexit and the presidential elections in the United States, could decrease investor demand for securities related to companies operating in Brazil, such as our Class A common shares and may harm our business and the price of our Class A common shares.

Any further downgrading of Brazil’s credit rating could reduce the trading price of our Class A common shares.

We may be harmed by investors’ perceptions of risks related to Brazil’s sovereign debt credit rating. Rating agencies regularly evaluate Brazil and its sovereign ratings, which are based on a number of factors including macroeconomic trends, fiscal and budgetary conditions, indebtedness metrics and the perspective of changes in any of these factors.

The rating agencies began to review Brazil’s sovereign credit rating in September 2015. Subsequently, the three major rating agencies downgraded Brazil’s investment-grade status:

•        Standard & Poor’s initially downgraded Brazil’s credit rating from BBB-negative to BB-positive in September 2015, and subsequently downgraded the rating to BB in February 2016 and then to BB-negative in January 2018, which is the current rating. In December 2019, Standard & Poor’s raised the outlook from neutral to positive, but lowered it again to neutral in April 2020, citing the slowdown or reduction in Brazil’s GDP in 2020 due to the COVID-19 pandemic, higher spending to combat the disease and prevent mass layoffs and increased uncertainty regarding Brazil’s capacity to advance its structural reform agenda.

•        In December 2015, Moody’s placed Brazil’s Baa3’s issue and bond ratings under review for downgrade and subsequently downgraded the issue and bond ratings to below investment grade, at Ba2-negative, citing the prospect of a further deterioration in Brazil’s debt indicators, taking into account the low growth environment and the challenging political scenario. In April 2018, Moody’s raised the outlook to neutral, which was affirmed in May 2020. The reasons cited to reaffirm the rating were then-applicable

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debt dynamics and a more favorable interest rate environment to provide an adequate buffer to manage higher indebtedness resulting from pandemic-related economic shock, improved policy effectiveness to support economic performance and fiscal consolidation post-coronavirus crisis and limited exposure to external debt, with a strong foreign exchange reserve position.

•        Fitch downgraded Brazil’s sovereign credit rating to BB-positive with a negative outlook in December 2015, citing the rapid expansion of the country’s budget deficit and the worse-than-expected recession. It subsequently downgraded the rating to BB in May 2016 and then to BB-negative in 2018, where it currently stands. In May 2020, Fitch revised the outlook from neutral to negative, citing the deterioration of Brazil’s economic and fiscal conditions, renewed political uncertainty and uncertainty over the duration and intensity of COVID-19.

Brazil’s sovereign credit rating is currently rated below investment grade by the three main credit rating agencies. Consequently, the prices of securities issued by companies with significant Brazilian operations have been negatively affected. A prolongation or worsening of the current Brazilian recession and continued political uncertainty, among other factors, could lead to further ratings downgrades. Any further downgrade of Brazil’s sovereign credit ratings could heighten investors’ perception of risk and, as a result, cause the trading price of our Class A common shares to decline.

We may face restrictions and penalties under the Brazilian Consumer Protection Code in the future.

Brazil has a series of strict consumer protection statutes, collectively known as the Consumer Protection Code (Código de Defesa do Consumidor), that are intended to safeguard consumer interests and that apply to all companies in Brazil that supply products or services to Brazilian consumers. These consumer protection provisions include protection against misleading and deceptive advertising, protection against coercive or unfair business practices and protection in the formation and interpretation of contracts, usually in the form of civil liabilities and administrative penalties for violations. These penalties are often levied by the Brazilian Consumer Protection Agencies (Fundação de Proteção e Defesa do Consumidor), or PROCONs, which oversee consumer issues on a district-by-district basis. Companies that operate across Brazil may face penalties from multiple PROCONs, as well as the National Secretariat for Consumers (Secretaria Nacional do Consumidor), or SENACON. Companies may settle claims made by consumers via PROCONs by paying compensation for violations directly to consumers and through a mechanism that allows them to adjust their conduct, called a conduct adjustment agreement (Termo de Ajustamento de Conduta), or TAC. Brazilian Public Prosecutor Offices may also commence investigations related to consumer rights violations and this TAC mechanism is also available for them. Companies that violate TACs face potential automatic fines. Brazilian Public Prosecutor Offices may also file public civil actions against companies in violation of consumer rights, seeking strict observation to the consumer protection law provisions and compensation for the damages consumers may have suffered.

As of December 31, 2020, our proceedings with PROCONs and small claims courts relating to consumer rights involved less than 0.016% of our users. To the extent consumers file such claims against us in the future, we may face reduced revenue due to refunds and fines for non-compliance that could negatively impact our results of operations.

Risks Relating to Being a Foreign Private Issuer and an Emerging Growth Company

As a foreign private issuer and an “emerging growth company” (as defined in the JOBS Act), we will have different disclosure and other requirements than U.S. domestic registrants and non-emerging growth companies.

As a foreign private issuer and emerging growth company, we may be subject to different disclosure and other requirements than domestic U.S. registrants and non-emerging growth companies. For example, as a foreign private issuer, in the United States, we are not subject to the same disclosure requirements as a domestic U.S. registrant under the Exchange Act, including the requirements to prepare and issue quarterly reports on Form 10-Q or to file current reports on Form 8-K upon the occurrence of specified significant events, the proxy rules applicable to domestic U.S. registrants under Section 14 of the Exchange Act or the insider reporting and short-swing profit rules applicable to domestic U.S. registrants under Section 16 of the Exchange Act. In addition, we intend to rely on exemptions from certain U.S. rules which will permit us to follow Cayman Islands legal requirements rather than certain of the requirements that are applicable to U.S. domestic registrants.

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We will follow Cayman Islands laws and regulations that are applicable to Cayman Islands companies. However, Cayman Islands laws and regulations applicable to Cayman Islands companies do not contain any provisions comparable to the U.S. proxy rules, the U.S. rules relating to the filing of reports on Form 10-Q or 8-K or the U.S. rules relating to liability for insiders who profit from trades made in a short period of time, as referred to above.

Furthermore, foreign private issuers are required to file their annual report on Form 20-F within 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information, although we will be subject to Cayman Islands laws and regulations having substantially the same effect as Regulation Fair Disclosure. As a result of the above, even though we are required to file reports on Form 6-K disclosing the limited information which we have made or are required to make public pursuant to Cayman Islands law, or are required to distribute to shareholders generally, and that is material to us, you may not receive information of the same type or amount that is required to be disclosed to shareholders of a U.S. company.

The JOBS Act contains provisions that, among other things, relax certain reporting requirements for emerging growth companies. Under this act, as an emerging growth company, we will not be subject to the same disclosure and financial reporting requirements as non-emerging growth companies. For example, as an emerging growth company, we are permitted to, and intend to take advantage of, certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. Also, we will not have to comply with future audit rules promulgated by the U.S. Public Company Accounting Oversight Board (unless the SEC determines otherwise) and our auditors will not need to attest to our internal controls under Section 404(b) of the Sarbanes-Oxley Act. We may follow these reporting exemptions until we are no longer an emerging growth company. As a result, our shareholders may not have access to certain information that they deem important. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual revenues of at least US$1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A common shares that is held by non-affiliates exceeds US$700 million as of the prior June 30th, and (2) the date on which we have issued more than US$1.0 billion in non-convertible debt during the prior three-year period. Accordingly, the information about us available to you will not be the same as, and may be more limited than, the information available to shareholders of a non-emerging growth company. We could be an “emerging growth company” for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our Class A common shares held by non-affiliates exceeds US$700 million as of any June 30 (the end of our second fiscal quarter) before that time, in which case we would no longer be an “emerging growth company” as of the following December 31 (our fiscal year end). We cannot predict if investors will find our Class A common shares less attractive because we may rely on these exemptions. If some investors find our Class A common shares less attractive as a result, there may be a less active trading market for our Class A common shares and the price of our Class A common shares may be more volatile.

Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently or within the same time frames as U.S. companies with securities registered under the Exchange Act. We currently prepare our financial statements in accordance with IFRS. We will not be required to file financial statements prepared in accordance with or reconciled to U.S. GAAP so long as our financial statements are prepared in accordance with IFRS as issued by the IASB. We are not required to comply with Regulation FD, which imposes restrictions on the selective disclosure of material information to shareholders. In addition, our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of our securities.

We cannot predict if investors will find our Class A common shares less attractive because we will rely on these exemptions. If some investors find our Class A common shares less attractive as a result, there may be a less active trading market for our Class A common shares and our share price may be more volatile.

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As a foreign private issuer, we are permitted to, and we will, rely on exemptions from certain stock exchange corporate governance standards applicable to U.S. issuers. This may afford less protection to holders of our Class A common shares.

As a foreign private issuer, we are permitted to, and we will, follow certain home country corporate governance practices instead of those otherwise required under Nasdaq’s rules for domestic U.S. issuers, provided that we disclose any significant ways in which our corporate governance practices differ from those followed by domestic companies under Nasdaq listing standards. See “Management — Foreign Private Issuer Statusfor more information.

As a result of our reliance on the corporate governance exemptions available to foreign private issuers under Nasdaq rules, you will not have the same protection afforded to shareholders of companies that are subject to all of Nasdaq’s corporate governance requirements. We also expect to be a “controlled company” within the meaning of the corporate governance standards of Nasdaq. If we were to lose our foreign private issuer status but remain a controlled company, we may rely on the “controlled company” exemption under Nasdaq corporate governance rules. For more information, see “Management — Controlled Company Exemptions.”

Availing ourselves of any of these exemptions, as opposed to complying with the requirements that are applicable to a U.S. domestic registrant, may provide less protection to you than is accorded to investors under Nasdaq’s corporate governance rules. Therefore, any foreign private issuer or “controlled company” exemptions we avail ourselves of in the future may reduce the scope of information and protection to which you are otherwise entitled as an investor.

We may lose our foreign private issuer status, which would then require us to comply with the Exchange Act’s domestic reporting regime and cause us to incur significant legal, accounting and other expenses.

In order to maintain our current status as a foreign private issuer, either (a) more than 50% of our outstanding voting securities must be either directly or indirectly owned of record by non-residents of the United States or (b)(i) a majority of our executive officers or directors may not be U.S. citizens or residents, (ii) more than 50% of our assets cannot be located in the United States and (iii) our business must be administered principally outside the United States. If we lose this status, we would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. We may also be required to make changes in our corporate governance practices in accordance with various SEC and stock exchange rules. The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with the reporting requirements applicable to a U.S. domestic issuer may be significantly higher than the costs we will incur as a foreign private issuer.

Risks Relating to Our Class A Common Shares and this Offering

There is no existing market for our Class A common shares, and we do not know whether one will develop to provide you with adequate liquidity. If our share price fluctuates after this offering, you could lose a significant part of your investment.

Prior to this offering, there has not been a public market for our Class A common shares. If an active trading market does not develop, you may have difficulty selling any of our Class A common shares that you buy. We cannot predict the extent to which investor interest in our company will lead to the development of an active trading market on Nasdaq, or how liquid that market might become. The initial public offering price for the Class A common shares will be determined by negotiations between us, the selling shareholders and the underwriters and may not be indicative of prices that will prevail in the open market following this offering. Consequently, you may not be able to sell our Class A common shares at prices equal to or greater than the price paid by you in this offering. In addition to the risks described above, the market price of our Class A common shares may be influenced by many factors, some of which are beyond our control, including:

•        the failure of financial analysts to cover our Class A common shares after this offering or changes in financial estimates by analysts;

•        actual or anticipated variations in our operating results;

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•        changes in financial estimates by financial analysts, or any failure by us to meet or exceed any of these estimates, or changes in the recommendations of any financial analysts that elect to follow our Class A common shares or the shares of our competitors;

•        announcements by us or our competitors of significant contracts or acquisitions;

•        future sales of our shares; and

•        investor perceptions of us and the industries in which we operate.

In addition, the stock market in general has experienced substantial price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of particular companies affected. These broad market and industry factors may materially harm the market price of our Class A common shares, regardless of our operating performance. In the past, following periods of volatility in the market price of certain companies’ securities, securities class action litigation has been instituted against these companies. This litigation, if instituted against us, could adversely affect our financial condition or results of operations. If a market does not develop or is not maintained, the liquidity and price of our Class A common shares could be seriously harmed.

Sales of substantial amounts of our Class A common shares in the public market, or the perception that these sales may occur, could cause the market price of our Class A common shares to decline.

Sales of substantial amounts of our Class A common shares in the public market, or the perception that these sales may occur, could cause the market price of our Class A common shares to decline. This could also impair our ability to raise additional capital through the sale of our equity securities. Under our Articles of Association, we are authorized to issue up to 2,000,000,000 shares, of which following this offering Class A common shares will be outstanding (assuming no exercise of the underwriters’ option to purchase additional shares) or          Class A common shares will be outstanding (assuming the underwriters’ option to purchase additional common shares is exercised in full). We have agreed with the underwriters, subject to certain exceptions, not to offer, sell, or dispose of any shares of our share capital or securities convertible into or exchangeable or exercisable for any shares of our share capital during the 180-day period following the date of this prospectus. We cannot predict the size of future issuances of our shares or the effect, if any, that future sales and issuances of shares would have on the market price of our Class A common shares.

In addition, prior to the completion of this offering, we intend to adopt a restricted share plan, pursuant to which we would have the discretion to grant restricted shares to eligible participants. See “Management — Long-Term Incentive Plan.” We intend to register all common shares that we may issue under our restricted share plan. Once we register these common shares, they can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates and the lock-up agreements described in the “Underwriting” section of this prospectus, and any other applicable restrictions. If a large number of our common shares or securities convertible into our common shares are sold in the public market after they become eligible for sale, the sales could reduce the trading price of our common shares and impede our ability to raise future capital.

J&F Participações will control all matters requiring shareholder approval. This concentration of ownership limits your ability to influence corporate matters.

Following this offering, J&F Participações will beneficially own 100% of our Class B common shares. Accordingly, it will control approximately        % of the voting power of our outstanding share capital following this offering, assuming no exercise of the underwriters’ option to purchase additional shares. All of the issued and outstanding capital stock of J&F Participações is beneficially owned by the Batista family, and is jointly controlled, pursuant to a shareholders’ agreement among the shareholders of J&F Participações, by Messrs. José Batista Sobrinho and José Batista Júnior. The J&F Participações shareholders’ agreement contains certain rights that could result in Messrs. Joesley Mendonça Batista and Wesley Mendonça Batista owning a controlling interest in J&F Participações, which could result in them, subject to prior approval by the Central Bank of Brazil, gaining effective voting control over us. For more information about the shareholders’ agreement of J&F Participações, see “Principal Shareholders — Shareholders’ Agreement of J&F Participações.” For more information about our corporate structure immediately following this offering, see “Summary — Our Corporate Structure.”

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J&F Participações will have the ability to control matters affecting, or submitted to a vote of, our shareholders. As a result, they may be able to elect a substantial majority of the members of our board of directors and set our management policies and exercise overall control over us. See “Management” and “Principal Shareholders” for more information. In addition, there is no restriction on our shareholders or board of directors, or in any of the settlements or plea agreements entered into with applicable governmental authorities, from appointing Mr. Joesley Mendonça Batista and/or Mr. Wesley Mendonça Batista as an officer of PicPay Brazil with prior approval of the Central Bank of Brazil, or as a member of our board of directors. See “— Risks Relating to Our Business and Industry — We are subject to reputational risk in connection with U.S. and Brazilian civil and criminal actions and investigations involving certain members of the Batista family, who will indirectly own a material portion of our Class B common shares. Damage to our reputation and image may materially adversely impact our business and prospects.”

The interests of this shareholder may conflict with, or differ from, your interests. For example, J&F Participações may cause us to make acquisitions that increase the amount of our indebtedness or outstanding shares, sell revenue-generating assets or inhibit change of control transactions that benefit other shareholders. J&F Participações may also pursue acquisition opportunities for itself that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. So long as J&F Participações continues to own a substantial number of our common shares it will significantly influence all our corporate decisions, and it may be able to effect or inhibit changes in the control of our company.

We have granted the holders of our Class B common shares preemptive rights to acquire shares that we may sell in the future, which may impair our ability to raise funds.

Under our Articles of Association, the holders of our Class B common shares are entitled to preemptive rights to purchase additional common shares in the event that we issue additional Class A common shares, upon the same economic terms and at the same price, in order to allow them to maintain their proportional ownership interests. The exercise by the holders of our Class B common shares of preemptive rights may impair our ability to raise funds, or adversely affect the terms on which we are able to raise funds, as we may not be able to offer to new investors the quantity of our shares that they may desire to purchase. For more information, see “Description of Share Capital — Preemptive or Similar Rights.”

Our Articles of Association contain anti-takeover provisions that may discourage a third-party from acquiring us and adversely affect the rights of holders of our Class A common shares.

Our Articles of Association contain certain provisions that could limit the ability of others to acquire our control, including a provision that grants authority to our board of directors to establish and issue from time to time one or more series of preferred shares without action by our shareholders and to determine, with respect to any series of preferred shares, the terms and rights of that series. These provisions could have the effect of depriving our shareholders of the opportunity to sell their shares at a premium over the prevailing market price by discouraging third parties from seeking to obtain our control in a tender offer or similar transactions. For more information, see “Description of Share Capital — Anti-Takeover Provisions in our Articles of Association.”

We do not anticipate paying any cash dividends in the foreseeable future.

We currently intend to retain our future earnings, if any, for the foreseeable future, to fund the operation of our business and future growth. We do not intend to pay any dividends to holders of our Class A common shares. As a result, capital appreciation in the price of our Class A common shares, if any, will be your only source of gain on an investment in our Class A common shares.

Our dual-class capital structure means our shares will not be included in certain indices. We cannot predict the impact this may have on our share price.

In 2017, FTSE Russell, S&P Dow Jones and MSCI announced changes to their eligibility criteria for inclusion of shares of public companies on certain indices to exclude companies with multiple classes of shares of common stock from being added to such indices. FTSE Russell announced plans to require new constituents of its indices to have at least five percent of their voting rights in the hands of public stockholders, whereas S&P Dow Jones announced that companies with multiple share classes, such as ours, will not be eligible for inclusion in the S&P 500, S&P MidCap 400 and S&P SmallCap 600, which together make up the S&P Composite 1500. MSCI also

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opened public consultations on their treatment of no-vote and multi-class structures and has temporarily barred new multi-class listings from its ACWI Investable Market Index and U.S. Investable Market 2500 Index. We cannot assure you that other stock indices will not take a similar approach to FTSE Russell, S&P Dow Jones and MSCI in the future. Under the announced policies, our dual class capital structure would make us ineligible for inclusion in any of these indices and, as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track these indices will not invest in our stock. These policies may depress the valuations of publicly traded companies excluded from the indices compared to those of other similar companies that are included.

The disparity in the voting rights among the classes of our shares may have a potential adverse effect on the price of our Class A common shares, and may limit or preclude your ability to influence corporate matters.

Each Class A common share will entitle its holder to one vote per share on all matters submitted to a vote of our shareholders. Each holder of our Class B common shares will be entitled to 10 votes per Class B common share. The difference in voting rights could adversely affect the value of our Class A common shares by, for example, delaying or deferring a change of control or if investors view, or any potential future purchaser of our company views, the superior voting rights of the Class B common shares to have value. Because of the ten-to-one voting ratio between our Class B and Class A common shares, the holders of our Class B common shares collectively will continue to control a majority of the combined voting power of our common shares and therefore be able to control all matters submitted to our shareholders so long as the Class B common shares represent at least 9.1% of all outstanding shares of our Class A and Class B common shares. This concentrated control will limit or preclude your ability to influence corporate matters for the foreseeable future.

Future transfers by holders of Class B common shares will generally result in those shares converting to Class A common shares, subject to limited exceptions, such as certain transfers effected to permitted transferees or for estate planning or charitable purposes. The conversion of Class B common shares to Class A common shares will have the effect, over time, of increasing the relative voting power of those holders of Class B common shares who retain their shares in the long term. For a description of our dual class structure, see “Description of Share Capital — Voting Rights.”

We are a Cayman Islands company and, because judicial precedent regarding the rights of shareholders is more limited under Cayman Islands law than that under U.S. law, you may have less protection for your shareholder rights than you would under U.S. law.

Our corporate affairs are governed by our Articles of Association, as amended and restated from time to time, the Companies Act and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as that from English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly defined as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less prescriptive body of securities laws than the United States. In addition, some U.S. states, such as Delaware, have more fulsome and judicially interpreted bodies of corporate law than the Cayman Islands.

As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholder(s) than they would as shareholders of a corporation incorporated in a jurisdiction in the United States.

You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in based on United States or other foreign laws against us, our management or the experts named in this prospectus.

We are a Cayman Islands company and substantially all of our assets are located outside of the United States. Substantially all of our current operations are conducted in Brazil. In addition, all of our directors and officers reside outside the United States. As a result, it may be difficult for you to effect service of process within the United States or elsewhere outside Brazil upon these persons. It may also be difficult for you to enforce in Brazil or

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Cayman Islands courts judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors, most of whom are not residents in the United States and the substantial majority of whose assets are located outside of the United States. It may be difficult or impossible for you to bring an action against us in the Cayman Islands if you believe your rights under the U.S. securities laws have been infringed. In addition, there is uncertainty as to whether the courts of the Cayman Islands or Brazil would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state and it is uncertain whether such Cayman Islands or Brazilian courts would hear original actions brought in the Cayman Islands or Brazil against us or such persons predicated upon the securities laws of the United States or any state. See “Enforceability of Civil Liabilities.”

New investors in our Class A common shares will experience immediate and substantial book value dilution after this offering.

The initial public offering price of our Class A common shares will be substantially higher than the pro forma net tangible book value per share of the outstanding Class A common shares immediately after this offering. Based on an assumed initial public offering price of US$        per share (the midpoint of the price range set forth on the cover of this prospectus) and our net tangible book value as of December 31, 2020, if you purchase our Class A common shares in this offering you will pay more for your shares than the amounts paid by our existing shareholders for their shares and you will suffer immediate dilution of approximately US$        per share in pro forma net tangible book value. As a result of this dilution, investors purchasing Class A common shares in this offering may receive significantly less than the full purchase price that they paid for the shares purchased in this offering in the event of a liquidation. See “Dilution.”

We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.

Our management will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our Class A common shares. The failure by our management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business, results of operations and financial condition. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.