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Group structure | 12 Months Ended
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Dec. 31, 2019
Text Block [Abstract] |
Group structure | 5. Group structure (i) Subsidiaries The following are the direct and indirect interests of Company in its subsidiaries for the purposes of these consolidated financial statements:
|  |  |  |  |  |  |  | % of Group’s interest (i) |
Entity name |  | Country of incorporation |  |  | Principal activities |  |  | 2019 |  |  | 2018 |  |  | 2017 |
Directly controlled |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
XP Investimentos S.A. |  |  | Brazil |  |  |  | Holding |  |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
Indirectly controlled |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
XP Investimentos Corretora de Câmbio, Títulos e Valores Mobiliários S.A. |  |  | Brazil |  |  |  | Broker-dealer |  |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
XP Investments US, LLC |  |  | USA |  |  |  | Broker-dealer |  |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
XP Investments UK LLP |  |  | UK |  |  |  | Inter-dealer broker and Organized Trading Facility (OTF) |  |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 99.90 | %
Sartus Capital LTD |  |  | UK |  |  |  | Investment advisor |  |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
XP Private (Europe) S.A. |  |  | UK |  |  |  | Investment advisor |  |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
XP Vida e Previdência S.A. (v) |  |  | Brazil |  |  |  | Private pension and insurance |  |  |  | 100.00 | % |  |  | 100.00 | % |  |  | — |
Banco XP S.A. (vi) |  |  | Brazil |  |  |  | Multipurpose bank |  |  |  | 100.00 | % |  |  | — |  |  |  | — |
Xperience Market Services LLC (vi) |  |  | USA |  |  |  | Non-operational |  |  |  | 100.00 | % |  |  | — |  |  |  | — |
Chamaleon Bravery Unipessoal LDA (vi) |  |  | Portugal |  |  |  | Investment Advisor (pending regulatory approval) |  |  |  | 100.00 | % |  |  | — |  |  |  | — |
XP Holding Investimentos S.A. |  |  | Brazil |  |  |  | Financial Holding |  |  |  | — |  |  |  | — |  |  |  | 100.00 | %
XP Controle 3 Participações S.A. |  |  | Brazil |  |  |  | Financial Holding |  |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
XPE Infomoney Educação Assessoria Empresarial e Participações Ltda. |  |  | Brazil |  |  |  | Digital Content services |  |  |  | 99.99 | % |  |  | 99.70 | % |  |  | 96.69 | %
Tecfinance Informática e Projetos de Sistemas Ltda. |  |  | Brazil |  |  |  | Rendering of IT services |  |  |  | 99.76 | % |  |  | 99.73 | % |  |  | 99.73 | %
XP Corretora de Seguros Ltda. |  |  | Brazil |  |  |  | Insurance Broker |  |  |  | 99.99 | % |  |  | 99.82 | % |  |  | 99.81 | %
XP Gestão de Recursos Ltda. |  |  | Brazil |  |  |  | Asset management |  |  |  | 93.70 | % |  |  | 92.80 | % |  |  | 91.65 | %
XP Finanças Assessoria Financeira Ltda. |  |  | Brazil |  |  |  | Investment consulting service |  |  |  | 99.99 | % |  |  | 99.99 | % |  |  | 99.95 | %
Infostocks Informações e Sistemas Ltda. |  |  | Brazil |  |  |  | Mediation of information systems |  |  |  | 99.99 | % |  |  | 99.99 | % |  |  | 99.99 | %
XP Advisory Gestão Recursos Ltda. |  |  | Brazil |  |  |  | Asset management |  |  |  | 99.57 | % |  |  | 99.52 | % |  |  | 99.52 | %
XDEX Intermediação Ltda. (iii) |  |  | Brazil |  |  |  | Intermediary and service agency |  |  |  | — |  |  |  | — |  |  |  | 99.99 | %
XP Holding International LLC (ii) |  |  | USA |  |  |  | International financial holding |  |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
XP Advisory US |  |  | USA |  |  |  | Investment advisor |  |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
XP Holding UK Ltd |  |  | UK |  |  |  | International financial holding |  |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
XP Vista Asset Management Ltda. (iv) |  |  | Brazil |  |  |  | Asset management |  |  |  | 99.42 | % |  |  | 99.60 | % |  |  | — |
XP Controle 4 Participações S.A. (v) |  |  | Brazil |  |  |  | Insurance holding |  |  |  | 100.00 | % |  |  | 100.00 | % |  |  | — |
Leadr Serviços Online Ltda. (vi) |  |  | Brazil |  |  |  | Social media |  |  |  | 99.99 | % |  |  | — |  |  |  | — |
Spiti Análise Ltda. (vi) |  |  | Brazil |  |  |  | Research (pending regulatory approval) |  |  |  | 99.99 | % |  |  | — |  |  |  | — |
Consolidated investments funds |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Falx Fundo de Investimento Multimercado Crédito Privado Investimento no Exterior |  |  | Brazil |  |  |  | Investment fund |  |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
Gladius Fundo de Investimento Multimercado Investimento no Exterior |  |  | Brazil |  |  |  | Investment fund |  |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
Scorpio Debentures Incentivadas Fundo de Investimento Multimercado Crédito Privado |  |  | Brazil |  |  |  | Investment fund |  |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
Galea Fundo de Investimento Multimercado Crédito Privado Investimento no Exterior |  | Brazil |  | Investment fund |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
Javelin Fundo de Investimento Multimercado Crédito Privado Investimento no Exterior |  | Brazil |  | Investment fund |  |  | 100.00 | % |  |  | 100.00 | % |  |  | 100.00 | %
Spatha Fundo de Investimento Multimercado Crédito Privado Investimento no Exterior |  | Brazil |  | Investment fund |  |  | 100.00 | % |  |  | 100.00 | % |  |  | — |
Frade Fundo de Investimento em Cotas de Fundos de Investimento em Direitos Creditórios NP |  | Brazil |  | Investment fund |  |  | 100.00 | % |  |  | 100.00 | % |  |  | — |
Frade III Fundo de Investimento em Cotas de Fundo de Investimento Multimercado Crédito Privado (vi) |  | Brazil |  | Investment fund |  |  | 100.00 | % |  |  | — |  |  |  | — |
Balista Debentures Incentivadas Fundo de Investimento Multimercado Crédito Privado (vi) |  | Brazil |  | Investment fund |  |  | 100.00 | % |  |  | — |  |  |  | — |
Coliseu Fundo de Investimento Multimercado Crédito Privado Investimento no Exterior (vi) |  | Brazil |  | Investment fund |  |  | 100.00 | % |  |  | — |  |  |  | — |
XP Short Brasil Alavancado Fundo de Investimento Multimercado Investimento no Exterior (vii) |  | Brazil |  | Investment fund |  |  | — |  |  |  | — |  |  |  | 100.00 | %
XP Pacote Brasil Alavancado Fundo de Investimento Multimercado Investimento no Exterior (vii) |  | Brazil |  | Investment fund |  |  | — |  |  |  | — |  |  |  | 100.00 | %
(i) | The percentage of participation represents the Group’s interest in total capital and voting capital of its subsidiaries.
(ii) | Subsidiaries legally merged into their respective immediate parent, with no impact on the consolidated financial statements.
(iii) | Relates to subsidiary incorporated in 2017 sold to Company’s controlling shareholders in 2018 at its early stages.
(iv) | Subsidiary acquired in 2018. See further details in Note 5 (ii) below.
(v) | Subsidiaries incorporated in 2018 for operating in the private pension and life insurance business, which is regulated by the Superintendency of Private Insurance (SUSEP) in Brazil.
(vi) | New subsidiaries and investment funds incorporated in the year.
(vii) | Investment funds closed during the year.
(ii) Business combinations Acquisition of Rico Corretora de Títulos e Valores Mobiliários S.A. On August 10th, 2017, following the approval of the Central Bank, the Group acquired Rico Corretora de Títulos e Valores Mobiliários S.A. (“Rico”) through the acquisition of its sole parent FLAFLU Participações S.A. (“FLAFLU”). With this transaction, the Group aimed to extend its operations in brokerage and securities distribution market to retail, through expanding the customer base and absorbing innovative technology in online market developed by Rico, in view of the complementary nature of positioning between the brands. Details of the net assets acquired, the goodwill and the purchase consideration are as follows:
|  | Fair value recognized on acquisition |
Assets |  |  |  |
Cash |  |  | 96 |
Financial instruments (FVPL) |  |  | 356,648 |
Financial instruments (FVOCI) |  |  | 20,212 |
Accounts receivable |  |  | 1,915 |
Other assets |  |  | 11,582 |
Deferred tax assets |  |  | 3,751 |
Property and equipment (Note 13 (a)) |  |  | 1,728 |
Intangible assets (Note 13 (b)) |  |  | 75,813 |
|  |  | 471,745 |
Liabilities |  |  |  |
Social and statutory obligations |  |  | (560 | )
Tax and social security obligations |  |  | (12,651 | )
Securities trading and intermediation |  |  | (322,371 | )
Provisions and continget liabilities (Note 25) |  |  | (7,921 | )
Other liabilities |  |  | (5,217 | )
|  |  | (348,720 | )
Total identifiable net assets at fair value |  |  | 123,025 |
Goodwill arising on acquisition (Note 13 (b)) |  |  | 281,702 |
Purchase consideration transferred |  |  | 404,727 |
Analysis of cash flows on acquisition |  |  |  |
Consideration paid in cash |  |  | 404,727 |
Net cash acquired with the subsidiary |  |  | (96 | )
Net of cash flow on acquisition (investing activities) |  |  | 404,631 |
For the purchase price allocation, the following intangible assets were identified. The valuation techniques used for measuring the fair value of separately identified intangible assets acquired were as follows:
Assets |  | Amount |  |  | Method |  | Expected amortization period |
Customer list |  |  | 50,077 |  |  | Multi-period excess earning method |  |  | 8 years |
Trademark |  |  | 19,304 |  |  | Relief from royalty |  |  | 10 years |
Technology |  |  | 2,028 |  |  | Relief from royalty |  |  | 3 years |
The fair value of the consideration given was R$ 404,727. The goodwill is attributable to the workforce and the high profitability of the acquired business. It will be deductible for tax purposes. The fair value and gross contractual amount of trade accounts receivable was the same—R$ 1,915. There was no other contingent liability recognized on the acquisition for a pending lawsuit, apart from R$ 7,921 already provisioned, related to tax contingencies (Note 25). Acquisition-related costs of R$ 690 are included in administrative expenses in profit or loss and in operating cash flows in the statement of cash flows. From the acquisition date, Rico contributed revenues of R$ 53,942 and net profit of R$ 12,125 to the Group’s consolidated statement of profit and loss for the year ended December 31, 2017. If the acquisition had occurred on January 1, 2017, consolidated pro-forma revenue and profit for the year ended December 31, 2017 would have been R$ 133,411 and R$ 29,919 respectively. Acquisition of XP Vista On January 5, 2018, the Group acquired 99.60% of shares of XP Vista Asset Management Ltda. (“XP Vista”), an asset management entity, through the acquisition of its controlling shareholder Marathon Investimentos e Participações S.A for a consideration of R$ 10,938, mostly comprised of cash in the amount of R$ 525. Goodwill in the amount of R$ 9,799, attributable to sinergies expected from the combined operations within the Group. Marathon was subsequently incorporated by the Group. (iii) Subscription (redemptions) of non-controlling interests In 2016, certain non-controlling interest subscribed for new quotes in a subsidiary investment fund, Pedras Secas Fundo de Investimento Multimercado Crédito Privado Investimento no Exterior, in the total amount of R$ 43,000. During 2017, such shareholders redeemed those quotes receiving R$ 45,550 from the investment fund. (iv) Other transactions with non-controlling interests In the course of its business, the Group admits individual partners to join the share capital of certain subsidiaries while others might decide to leave the subsidiaries resulting in gains or losses recorded directly to equity. For the year ended December 31, 2019, the Group recorded a gain of R$ 374 (2018 – R$ 409 gain), while non-controlling interest decreased in the amount of R$ 2,229 (2018 – R$ 788 decrease).

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