EXCLUSIVE-Uruguay payments provider DLocal explores sale, sources say

By Milana Vinn

NEW YORK, Dec 18 (Reuters) - DLocal DLO.O, a Latin American payments provider with a market value of about $3.4 billion, is exploring options including a potential sale, people familiar with the matter told Reuters on Wednesday.

Montevideo, Uruguay-based DLocal, which counts buyout firm General Atlantic as its largest shareholder, is working with Morgan Stanley MS.N to gauge takeover interest from potential acquirers, the sources said, requesting anonymity as the discussions are confidential.

Potential buyers include private equity firms and large financial technology providers, the sources added, cautioning that a deal is not guaranteed.

This is not the first time DLocal has attempted to explore a sale. Last year, the company tapped its investment bankers to launch a sale process but the talks fizzled after it could not agree on financial terms with suitors, one of the sources said.

DLocal and Morgan Stanley declined to comment.

Payments technology providers grew rapidly during the COVID-19 pandemic as customers turned to digital payment methods. Several of them have since struggled to maintain those growth rates as cash usage increased after lockdowns were lifted and newer fintech competitors emerged.

The sharp fall in valuations has made several payments firms acquisition targets for private equity firms and larger fintech rivals, thus driving up consolidation in the industry.

In April, buyout firm Advent International clinched a $6.3 billion deal to acquire Canada-based Nuvei, a payments technology firm backed by actor Ryan Reynolds.

Reuters reported in September that Canadian payments software firm Lightspeed Commerce LSPD.TO is exploring a sale.

DLocal operates across most of Latin America as well as parts of Africa and Asia, and its customers include Amazon AMZN.O, Microsoft MSFT.O, and Google GOOGL.O.

DLocal's shares, which have been trading in New York since their initial public offering in 2021, are down 33% so far this year. Its performance has been hurt by exposure to weaker currencies in emerging markets, including Argentina, and a decline in cross-border payment volumes.

The company reported a 5% rise in gross profit in its most recent quarterly earnings, as volumes improved in some of its markets, despite the impact of market share losses on credit card payments in Brazil and higher expatriation costs in Argentina.

(Reporting by Milana Vinn in New York; Editing by Chizu Nomiyama)

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