3rd UPDATE: Santander To Raise Up To EUR5 Billion In Brazilian IPO
21 September 2009 - 3:51PM
Dow Jones News
Banco Santander SA (STD) said Monday it plans to raise almost
EUR5 billion through the initial public offering of its Brazilian
unit, giving the Spanish banking giant more heft to take on rivals
in Latin America's largest economy.
The transaction, if successful, would be the clearest sign yet
that Santander's ambitious dealmaking in Brazil has started to pay
off. It underscores the growing importance of the unit for the
Spanish lender as a driver of profit and as a big source of
funding.
Brazil's economy has held up relatively well during the
financial crisis, pulling itself out of recession in the second
quarter thanks to a rebound in the industrial and service sectors.
That contrasts with the sharp downturns Santander is facing in its
other two biggest markets, Spain and the U.K.
The IPO of just over 15% of the unit would place the market
value for Santander Brazil at between EUR31 billion and EUR35
billion, putting it among the world's 30 biggest banks by that
measure. By market value, Santander Brazil would equal top tier
European banks like Deutsche Bank AG (DB) and Societe Generale SA
(GLE.FR).
It is also more than a third of Santander's overall market value
of EUR89.3 billion.
The listing would be the biggest ever in Brazil, and it would
rank as the second-biggest in the world this year, according to
Dealogic, behind the EUR5.17 billion listing of China State
Construction Engineering Corp.
The bank will offer its shares in the form of units, with each
unit comprising 55 common shares and 50 preferred shares of Banco
Santander Brazil SA.
In a regulatory filing Monday, Santander said it plans to sell
525 million of these units in the price range of 22-25 Brazilian
reals.
The offer is set to price on Oct. 6 and will begin trading on
the New York Stock Exchange a day later and in Sao Paulo on Oct.
8.
A lower end valuation would allow Santander to raise BRL11.55
billion (EUR4.34 billion), while a high end valuation would give it
BRL13.13 billion (EUR4.93 billion).
Santander has said that the bulk of the proceeds would be spent
on opening 600 branches in Brazil by 2013, expanding its network by
almost a third.
The bank has invested heavily in Brazil over the last decade and
wants to establish itself alongside the two major private banking
titans, Itau Unibanco (ITUB) and Banco Bradesco SA (BBD).
The Spanish bank entered Brazil in 1997 through the acquisition
of Banco Geral, and bought three other banks there over a three
year period, investing a total of $6 billion. The biggest of these
was the purchase of Banespa in 2000.
Then in 2007, the Spanish bank acquired local retail bank Banco
Real as part of a consortium deal with Real's previous owner, Dutch
bank ABN Amro Holding NV, doubling its presence in Brazil.
That deal made it Brazil's third-largest private bank by assets,
behind Itau Unibanco at number one and Bradesco at number two,
government-controlled Banco do Brasil (BBAS3.BR) is the largest
bank in Brazil.
The unit generated EUR961 million in net profit in the first
half, a fifth of the bank's total profit in the period.
At 1256 GMT, Santander's shares were down 1.5%, or EUR0.15, at
EUR10.90. The Spanish market was down 1%.
Santander in Brazil has a network of 2,091 branches and 1,521
on-site service units located at corporate customers' premises. The
bank has 21 million customers in the country.
The IPO is being coordinated by Santander, Credit Suisse (CS),
Bank of America Merrill Lynch (BAC), and UBS AG (UBS).
The IPO includes a green-shoe option which allows the investment
banks arranging the IPO to sell more shares if demand is high.
Excluding the green-shoe, Santander Brazil's free float following
the IPO will be 15.6%, Santander said.
Company Web site: www.santander.com
-By Christopher Bjork, Dow Jones Newswires, +34 91 395 81 23,
christopher.bjork@dowjones.com
(Rogerio Jelmayer contributed to this article from Rio de
Janeiro.)