* Santander Consumer to offer 65.2 mln shares at between
* Private equity funds to cut stake to about 10 pct from 25
* IPO will raise $1.56 bln at top end of range
By Tanya Agrawal
Jan 9 Santander Consumer USA Holdings Inc
, the U.S. consumer-finance arm of Spain's Banco
Santander SA, is seeking a valuation of up to $8.4
billion in an initial public offering as its private equity
stakeholders cash out.
The IPO's performance will be closely watched ahead of
widely expected offerings from other financial services
companies this year.
IPO activity surged last year as low interest rates and a
surging stock market enticed investors. Companies raised $159.7
billion from IPOs globally, a 37 percent increase on 2012, and
bankers expect 2014 to carry on where 2013 left off.
"The Santander deal is an indication of a strong IPO market
and risk appetite as we kick of the U.S. IPO season," said Josef
Schuster, founder of IPOX Schuster, a Chicago-based IPO research
and investment house.
Ally Financial Inc, majority owned by the U.S.
government, is hoping to go public this year while General
Electric Co plans to spin off of its credit card unit.
Santander Consumer, which focuses on auto loans, said it
expected the IPO to raise up to $1.56 billion, based on the sale
of 65.2 million shares priced at between $22 and $24 each.
Shareholders including Banco Santander will sell all of the
shares being offered. Santander Consumer will not receive any of
the proceeds, Santander Consumer said in a filing with the U.S.
Securities and Exchange Commission on Thursday. ()
Dallas-based Santander Consumer is 65-percent owned by its
Spanish parent. An investment vehicle owned by private equity
firms Centerbridge Partners, Kohlberg Kravis Roberts & Co
and Warburg Pincus owns about 25 percent.
The offering will reduce the fund's holding to about 10
percent. The fund, which acquired the stake for $1 billion in
2011, is offering about 80 percent of the shares in the
offering, while Banco Santander will sell the rest.
Santander Consumer Chief Executive Thomas Dundon owns 10
percent of the company and will retain his stake.
The lender entered into a 10-year agreement with Chrysler
Group LLC in 2013 to replace Ally Financial as the
preferred originator of loans for Chrysler vehicles.
U.S. auto industry sales are expected to grow by 1 million
vehicles to 15.5 million this year, with manufacturers expecting
some of their highest sales since 2006.
Santander Consumer, which offers loans through 14,000 car
dealers across the United States, has about $25.6 billion of
loans outstanding. As of Sept. 30, about $850 billion of auto
loans were outstanding in the United States.
The company has been profitable for the past 10 years,
posting net income of about $582 million for the nine months
ended Sept. 30.
Banco Santander, Spain's largest lender, has been selling
assets as it weathers a deep recession in its home country and
bumps up its capital ahead of stricter new international rules.
Santander is also expected to float its UK business in 2014
Santander Consumer will list on the New York Stock Exchange
under the symbol "SC". Citigroup and J.P. Morgan are the lead
underwriters for the offering.
Banco Santander's shares were down 1.3 percent at 6.70 euros
in Madrid at 1613 GMT.