Photographer: Denis Doyle/Bloomberg

Spain Unicaja Raises $783 Million in IPO to Repay State Aid

  • Malaga-based lender prices its IPO at low end of range
  • Unicaja deal moving ahead three weeks after Popular resolution

Unicaja Banco SA raised about 688 million euros ($783 million) in an initial public offering that turned into a test of confidence in Spanish banks after this month’s demise of a larger lender.

Unicaja, based in the southern city of Malaga, priced the sale of 40.3 percent of its equity at 1.10 euros per share, the low end of the 1.10-1.40-euro range set earlier this month, it said in a regulatory filing. The stock will start trading June 30.

Analysts had questioned whether Unicaja would pursue the listing after Banco Santander SA took over a tottering Banco Popular Espanol SA this month in a fire sale arranged by European regulators. Days later, the Spanish securities regulator banned short-selling in Liberbank SA, whose shares had plunged on contagion from Popular’s turmoil. Liberbank was the last Spanish banking IPO, in 2013.

Unicaja will trade at a price-to-book ratio of 0.4 to 0.45, according to Nicolas Lopez, head of research at Mercados y Gestion de Valores.

“That valuation shows that the market stills sees with skepticism the potential of smaller banks in a world of low interest rates and digitalization,” he said. “The latest events in the Spanish banking industry may have also affected the valuation of Unicaja, as investors differentiate between large, well-managed banks and former saving lenders that are still dealing with real-estate issues.”

The transaction will give Unicaja a market value of 1.7 billion euros, excluding the effect of a potential greenshoe option. Proceeds will be used to repay about 604 million euros of contingent convertible securities the bank inherited from a nationalized lender acquired in 2014. Unicaja has until April 2018 to repay those securities.

Balance Sheet

Unicaja’s share sale is another milestone in the reorganization of a sector upended by a property bust that resulted in a raft of bailouts five years ago. Bankia SA, Spain’s largest state-owned bank, agreed Tuesday to acquire Banco Mare Nostrum SA in an all-stock deal enabling the government to proceed with plans to sell its stake in the rescued lenders.

Unicaja has a more robust balance sheet than some of its peers, with less real estate exposure and a stronger capital position, Renta 4 analyst Nuria Alvarez said earlier this month. Its capital ratio -- a measure of financial strength -- stood at 11.8 percent as of December, while Popular’s ratio was 8.17 percent. The coverage ratio for foreclosed assets at Unicaja as of December was 62 percent, compared with Liberbank’s 43 percent in March. 

Morgan Stanley and UBS Group AG were global coordinators and bookrunners on the sale.

A former savings bank, Unicaja has 57 billion euros in assets and 1,300 branches. It is mainly owned by Fundacion Bancaria Unicaja, a nonprofit organization that uses dividends from the bank to fund charitable work. The lender reported a 135 million-euro profit in 2016.

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