LatAm set to fuel Vtex's geographic expansion, organic growth post-IPO

Rio de Janeiro-based e-commerce software platform Vtex plans to use proceeds from a just completed IPO on the NYSE to add new customers, develop new products and expand its footprint regionally and globally, COO Astha Malik told BNamericas.

Vtex, which builds e-commerce solutions for retailers, raised US$361mn in the initial public offering on Tuesday, selling 19mn shares at US$19 – above the expected range. 

The listing valued the company at around US$3.6bn. 

“It’s a really exciting day for us and for all of our employees,” Malik said after the IPO.

According to the COO, one of the growth levers following the listing will be expanding Vtex's customer base, particularly in Latin America.

Bolstered by the pandemic, the global e-commerce market grew 28% in 2020, but penetration is still at 18%, according to Malik. In Latin America, the market grew 36%, with penetration reaching 6%.

“So we have a lot of opportunities to grow by going after new customers,” she said.

At an event last year, Vtex executives said the company planned to invest US$20mn in Latin America, excluding Brazil, over the following four years. Argentina, Chile, Colombia and Mexico were cited as the main growth markets.

A second growth lever will be supporting customers that have recently gone online amid the health crisis with more developed e-commerce services, such as marketplaces.

Finally, a third growth lever will be geographic growth, prioritizing cross-country expansion in Latin America, where there is large untapped e-commerce demand, but with opportunities also in Europe, the Middle East and Africa (EMEA) and the US, where the company is still in a relatively early stage of market penetration.

“Overall, in terms of our general purpose investments, we’ll also accelerate investments in R&D and in hiring talent,” said Malik.

While acquisitions are not a top priority – the company has focused on developing and delivering technology to customers mostly organically – Vtex will “definitely look into” new M&A opportunities provided they align with market needs and the company’s strategy, she said.

Vtex’s latest acquisition was conversational company Suiteshare, in June for an undisclosed sum.

Vtex operates in 32 countries, having 2,500 online stores live. The company’s clients include Whirlpool, AB InBev, Nestlé, Coca-Cola, Sony and Motorola. 

Its investors include SoftBank, Tiger Global and Lone Pine Capital. Vtex raised US$140mn in an investment round led by SoftBank last year.

An entity affiliated with Tiger Global Management has indicated an interest in buying up to US$50mn worth of shares at the offering price, according to Vtex documents filed with the US Securities and Exchange Commission.

Vtex's IPO was coordinated by JPMorgan Chase, Goldman Sachs and Bank of America.