Potential conflicts of interest with other businesses of XP and XP affiliated entities, including portfolio companies of XP affiliated funds or clients’ accounts managed by such entities, particularly in relation to investment banking, broker-dealer and other asset management activities, could negatively impact the performance of an investment in us.
There are significant potential conflicts of interest that could negatively impact the performance of an investment in us. A number of these potential conflicts of interest, including those that may be associated with the financial or other interests of XP, are discussed in more detail in “Item 10. Directors, Executive Officers and Corporate Governance— Conflicts of Interest.” They are not, and are not intended to be, a complete enumeration or explanation of all of the potential conflicts of interest that may arise.
We and our Sponsor are affiliates of XP Inc., one of Brazil’s largest independent investment platforms and a Nasdaq listed company (NASDAQ: XP). Our executive team consisting of Chu Kong, Guilherme Teixeira and Fabio Kann as well as our board member, Marcos Peixoto, are all currently associated with XP and will not be independent of XP (although there is no assurance that any of them will remain associated with XP). XP, through its subsidiaries, is an active full-service investment banking, broker-dealer, asset management and financial services organization and a major participant in the financial markets, in particular in Brazil. As such, XP, through its subsidiaries, provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, and high net-worth and other individuals. XP, through its subsidiaries, acts as an investment banker, research provider, investment adviser, asset manager, financier, adviser, market maker, prime broker, derivatives dealer, lender, counterparty, agent, principal and investor. In those and other capacities, XP advises clients in Brazil, the U.S. and other markets and purchases, sells, holds and recommends a broad array of investments, including securities, derivatives, loans, commodities, currencies, credit default swaps, indices, baskets and other financial instruments and products, for its own account and for the accounts of clients, through client accounts and through the relationships and products it sponsors, manages and advises. XP and the XP affiliated entities have direct and indirect interests in the global fixed income, currency, commodity, equities, bank loan and other markets, and the securities and issuers, in which we or accounts in which personnel or clients of XP and XP affiliated entities have an interest, or investment vehicles that XP or any XP affiliated entity sponsors, manages or advises, may directly and indirectly invest. While XP and the XP affiliated entities will not have any duty to offer acquisition opportunities to us, XP and the XP affiliated entities may become aware of a potential transaction that may be an attractive opportunity for us, which it may or may not decide to share with us. Additionally, we may, but are not required to, engage XP affiliated entities, including XP Investimentos, and XP’s U.S. Broker-dealer, XP Investments US, LLC, for services as a financial advisor in connection with identifying and investigating potential targets for our Business Combination or in connection with any services or financing transaction to be entered into in connection with our initial Business Combination. Conflicts may arise from XP’s sponsorship of our company, its provision of services both to us (including, through XP Investimentos, as a financial advisor) and to third-party clients, as well as from actions undertaken by XP and the XP affiliated entities for their own account or for the account of others. In performing services for other clients and also when acting for their own account, XP and the XP affiliated entities may take commercial steps which may have an adverse effect on us, including but not limited to, in the form of competition for the same targets we may be interested in. Any of XP’s or the XP affiliated entities’ financial market activities may, individually or in the aggregate, have an adverse effect on us, and the interests of XP and the XP affiliated entities or their clients or counterparties may at times be adverse to ours.
Please see “Item 10. Directors, Executive Officers and Corporate Governance — Conflicts of Interest” for a detailed description of potential conflicts of interest relating to XP Inc.
We may engage in a Business Combination with one or more target businesses that have relationships with our Sponsor, our directors or officers or other XP affiliated entities which may raise potential conflicts of interest.
In light of the involvement of our Sponsor, officers and directors with other businesses, we may decide to acquire one or more businesses affiliated with or competitive with XP, our Sponsor, officers and directors, or other XP affiliated entities. Certain of our directors and officers also serve as officers and board members for other entities, including those described under “Item 10. Directors, Executive Officers and Corporate Governance — Conflicts of Interest.” These entities may compete with us for acquisition opportunities and may have overlapping investment objectives, and potential conflicts may arise with respect to XP’s decision regarding how to allocate investment opportunities among us and other funds. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria and guidelines for a Business Combination and such transaction was approved by a majority of our independent and disinterested directors. Despite our agreement that we, or a committee of independent and disinterested directors, will obtain an opinion from an independent investment banking firm or from an independent accounting firm regarding the fairness to our company from a financial point of view of a Business Combination with one or more businesses affiliated with XP, our Sponsor, directors or officers, potential