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EXCLUSIVE-Brazil credit card processor Stone plans New York IPO -sources

SAO PAULO, Jan 19 (Reuters) - Brazilian credit card processing firm Stone Pagamentos SA is planning its initial public offering in New York by the second half of the year, three people with knowledge of the matter said, to raise funds to compete with larger rivals Cielo SA and the Rede division of Itaú Unibanco Holding SA.

Stone has discussed with investment banks a transaction in which the company would raise money and some shareholders would sell part of their stakes, the sources added, asking for anonymity because the talks are still private. Stone has not yet hired advisers.

The company, controlled by founders André Street and Eduardo Pontes, has among its minority shareholders British buyout firm Actis LLP and Brazil's Gavea Investimentos Ltda.

Other shareholders include Madrone Capital Partners, a U.S.-based investment firm which manages part of the fortune of the Walton family, the majority owners of retail giant Wal-Mart Stores Inc, and three of the founders of 3G Capital Inc: Jorge Paulo Lemann, Marcel Telles and Carlos Alberto Sicupira.

Stone, Gavea and Madrone did not immediately comment. Actis declined to comment.

RACE TO GROW

Stone would be the second Brazilian card processing firm to list shares this year, as competition increases in the industry amid a nascent economic recovery after the country's harshest recession in decades.

PagSeguro Internet Ltda filed for an initial public offering last month, with underwriters Goldman Sachs & Co, Morgan Stanley, Credit Suisse Group AG, Deutsche Bank Securities and Bank of America Merrill Lynch.

PagSeguro, owned by Brazilian media group Universo Online SA (UOL), filed for an IPO on the New York Stock Exchange to raise at least $1.6 billion. The IPO will price next week and shares will begin trading on Jan. 24.

Stone shareholders are waiting to confirm the valuation of PagSeguro's IPO before proceeding with the plans for their own offering, the sources added.

According to the sources, Stone has 4.5 percent of Brazil's payment market, in which a dozen credit card processing firms are competing for a share of robust growth.

In 2015, only 32 percent of Brazilians above age 15 had a credit card, compared to 60 percent in the United States, according to the World Bank.

($1 = 3.21 reais) (Reporting by Carolina Mandl; Additional reporting by Tatiana Bautzer; Editing by Phil Berlowitz)