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Santander Consumer USA Seeks $1.56 Billion in IPO

Banco Santander SA (SAN)’s U.S. consumer lender subsidiary, which originates subprime loans for new-vehicle purchases and leases, is seeking to raise as much as $1.56 billion in an initial public offering.

Santander Consumer USA Holdings Inc. said selling stockholders, including Banco Santander and funds managed by Centerbridge Partners LP, Kohlberg Kravis Roberts & Co. and Warburg Pincus LLC, are offering 65.2 million shares. The price is $22 to $24 apiece, according to a regulatory filing today.

Santander Consumer USA, based in Dallas, is 65 percent owned by Spain’s biggest bank, the filing shows. Founded in 1995, Santander Consumer USA originates auto loans through car dealerships, manufacturers and banks. The company recently paid Chrysler Group LLC (CGC) $150 million to be the preferred provider of the automaker’s loans over the next 10 years under the brand Chrysler Capital.

In October 2011, Santander said it would sell a 35 percent stake in the U.S. auto loans unit for $1.15 billion and agreed at the time that an IPO would be one way for the buyers of the shares to exit their investment.

After the IPO, the company plans to pay quarterly dividends of 15 cents a share, according to the regulatory filing. Santander Holdings USA, a Santander unit, will reduce its stake to 61.3 percent from 64.9 percent in the share sale, while Sponsor Auto Finance, an investment vehicle for Centerbridge, KKR and Warburg Pincus, will cut its ownership to 9.8 percent from 24.9 percent.

Santander Consumer USA has applied to trade on the New York Stock Exchange under the symbol “SC.” Citigroup Inc. and JPMorgan Chase & Co. are managing the offering.

To contact the reporter on this story: Leslie Picker in New York at lpicker2@bloomberg.net

To contact the editor responsible for this story: Jeffrey McCracken at jmccracken3@bloomberg.net

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