UPDATE 3-BankUnited IPO raises more than expected-underwriter

* BankUnited IPO raises $783 mln

* Prices $2 above range; sells more shares -underwriter

* Financial IPOs tend to initially do better -data

* Underwriters: MS, BofA, Deutsche Bank, GS (Recasts that investors betting on growth, updates with background)

By Clare Baldwin and Paritosh Bansal

NEW YORK, Jan 27 (Reuters) - BankUnited (BKU.N) raised a higher-than-expected $783 million in an initial public offering, as investors bet that the Florida lender, backed by private equity and run by a veteran banker, will grow in the region and beyond.

BankUnited's IPO is the first for a major failed institution taken over by private investors during the financial crisis, and its success could bode well for the owners of others such as IndyMac -- now known as OneWest Bank -- that were bought by private investors during the crisis.

BankUnited's owners, which include Wilbur Ross's WL Ross & Co, Blackstone Group (BX.N) and Carlyle Group [CYL.UL], are seeing their $900 million initial investment nearly triple at the IPO price, although the gains are mostly on paper.

The returns could increase further if the stock performs well. BankUnited will start trading on the New York Stock Exchange on Friday under the symbol "BKU."

The Federal Deposit Insurance Corp (FDIC), which sold the assets of the failed Florida lender to these investors in 2009, estimates a $5.7 billion cost to the fund.

But the agency saved about $1.5 billion by avoiding the bank's liquidation. It struck a deal during the financial crisis when it had few other takers for the assets and was grappling with how to deal with private equity's interest in the U.S. banking sector. [ID:nN2698106]

Florida-based BankUnited sold 29 million shares for $27 each, an underwriter said on Thursday, confirming an earlier Reuters report that the IPO was likely to price $1 to $2 above the range.

BankUnited had filed with U.S. regulators to sell 26.25 million shares at $23 to $25 each.

The company sold shares at about twice the bank's tangible book value. First Niagara Financial Group Inc (FNFG.O), a regional bank that has been aggressively expanding, trades at 1.8 times tangible book value.

Over the past decade, financial services IPOs have risen an average of 13.64 percent on the first day of trade, compared with 10.88 percent for the IPOs of all companies debuting in the United States, according to Ipreo, which provides capital markets data and analytic services.

After three months of trading, however, financial services IPO returns have historically matched the average 15 percent returns of all IPOs, according to Ipreo.

The best-performing financial services IPO was Fortress Investment Group's (FIG.N) 2007 share float. Its shares rose nearly 68 percent on their first day of trade, according to the data.

BankUnited has more than 75 branches, primarily in Florida, and also plans eventually to open branches in New York. As of Sept. 30, the bank had $11.2 billion in total assets and $9.9 billion in total liabilities.

The original BankUnited failed after making risky loans known as "option adjustable rate mortgages," which allow borrowers to choose how much principal to repay every month. It was seized and sold to the private equity consortium led by veteran banker John Kanas.

The private equity firms also struck a deal with the FDIC to limit losses.

Kanas, a former head of North Fork Bank, invested $23.5 million of his own money in the deal, and became the bank's chief executive. Kanas now appears poised to recoup his investment through the IPO and still control a stake worth several times his initial investment. [ID:nN2698106]

Most of the shares in the IPO are being sold by the private investors. All of the major investors are selling a portion of their shares, and the private equity owners could more than double their investment.

Underwriters on the offering were led by Morgan Stanley, Bank of America Merrill Lynch, Deutsche Bank Securities and Goldman Sachs & Co. (Additional reporting by Alina Selyukh; Editing by Steve Orlofsky, Gary Hill)