Banco Santander SA’s Mexican unit plans to raise as much as $4 billion in a record initial public offering for Latin America’s second-biggest economy, according to two people familiar with the matter.
Grupo Financiero Santander Mexico SAB, the nation’s fourth- largest lender by outstanding loans, will probably sell the shares after the first week of September, said the people, who asked not to be identified because the information isn’t public. The Mexico City-based bank may sell a 25 percent to 30 percent stake, one of the people said.
While Spanish banks’ net borrowings from the European Central Bank rose to a record in July as a part of a bailout, Santander’s Mexican subsidiary reported a second-quarter profit of 5.3 billion pesos ($404 million) in an economy that is growing at about twice the pace of the U.S. The IPO will come as Grupo Financiero Banorte (GFNORTEO) SAB, Mexico’s biggest publicly-traded bank, has rallied 65 percent this year.
“People are looking for consumer plays, more liquid names,” said Eric Conrads, who helps manage $1 billion in stocks at ING Groep NV in New York. “If they’re flexible enough in terms of valuation, it could take some of the flows from Banorte.”
Citigroup Inc., JPMorgan Chase & Co., Deutsche Bank AG and Santander are among the banks helping manage the sale, according to the people.
A Santander Mexico press official, who asked not to be identified, declined to comment, citing company policy. A spokeswoman with the Madrid-based parent company, who also asked not to be named, declined to comment.
Corp. Inmobiliaria Vesta SAB (VESTA*), a Mexican industrial park operator, sold shares on July 19 after Alpek SAB (ALPEKA), the country’s largest publicly-traded petrochemical company, sold stock in April, in Mexico’s only two IPOs this year.
Banco Santander Chairman Emilio Botin said June 25 the bank planned to sell shares in an IPO of its Mexican unit on Oct. 4 to take advantage of growth in the Latin American country.
Paulo Carreno, a spokesman with Citigroup’s Mexico unit Banamex, didn’t return a phone call seeking comment. Jorge Arce, chief country officer at Deutsche Bank’s Mexico unit, didn’t respond to a phone call. An official at JPMorgan’s Mexico unit, who asked not to be identified, declined to comment.
Mexico’s outstanding consumer loans rose 24 percent in real terms in June compared with the same period a year ago, according to the latest lending report from the National Securities and Banking Commission. Total mortgage credit increased 9 percent in real terms versus the same month in 2011, the report showed.
Santander Mexico’s outstanding loans totaled 339 billion pesos at the end of June, an increase of 17 percent from the same month a year earlier, the company said on July 26.
Banco Santander SA (SAN), Spain’s biggest bank, said July 26 that second-quarter profit dropped 93 percent on costs for purging bad loans. Net income fell to 100 million euros ($122 million) from 1.39 billion euros a year ago, missing analysts’ estimates.
Banorte climbed 0.2 percent today, after paring gains of as much as 1.7 percent amid speculation the Santander offering may redirect investor interest.
Brazil has completed three offerings and three were scrapped, according to data compiled by Bloomberg. Four Chilean companies have made their trading debuts in 2012, making the country the most active IPO market in Latin America. Colombia has had two IPOs.
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