SAO PAULO, March 6 (Reuters) – Brazilian fintech company Meliuz (CASH3.SA) has revealed a new strategy involving the allocation of a portion of its cash reserves to Bitcoin. This announcement led to a surge in the company’s Sao Paulo-traded shares, which jumped over 25%.
Meliuz stated that its goal is to secure “long-term returns” through these Bitcoin investments. The company is taking inspiration from firms like U.S.-based MicroStrategy (MSTR.O), a prominent corporate holder of cryptocurrency, as well as Japan’s Metaplanet (3350.T).
According to a securities filing, Meliuz can allocate up to 10% of its cash reserves to Bitcoin. The firm has already acquired 45.72 Bitcoin for approximately $4.1 million.
Founded in 2011, Meliuz initially offered cashback incentives for online purchases, expanding into physical retail and app usage. The company now provides free digital accounts and credit cards. After going public in late 2020, the company’s stock declined in recent years, affected by high interest rates in Brazil. The company currently has a net cash balance exceeding 240 million reais ($41.72 million), as indicated in the filing.
“Allocating a significant amount of our capital to fixed income investments may seem like a prudent strategy, but in practice we believe it represents a significant opportunity cost,” said Chairman Israel Salmen in a statement. “This (new) strategy will not only protect and strengthen Meliuz’s financial position, but also has the potential to position us as pioneers in a financial transformation that is already underway globally.”
Meliuz will conduct a thorough analysis, including a study on the “adoption of bitcoin as the main strategic asset of our treasury,” according to the report. Analysts at UBS BB noted that while relatively new among Brazilian companies, Meliuz’s strategy is in line with a growing global trend of seeking alternative stores of value and potential returns. They added that “If successful, the strategy might set Meliuz apart in attracting investors interested in crypto exposure.” However, they also warned that “On the other side, it could create more volatility to the results.”
($1 = 5.7533 reais)
