Financial Markets

Santander raises $9.01bn in record Brazil IPO

By Elzio Barreto and Phil Wahba of Reuters
10:41 AM, 7 Oct 2009

SAO PAULO/NEW YORK - Banco Santander's Brazilian unit raised 14.1 billion reais ($A9.01 billion) in a record initial public offering in Brazil and the largest IPO on a US exchange in 18 months.

The bank, formally known as Banco Santander (Brasil) SA, sold 600 million units at a price of 23.5 reais each, according to a filing with Brazil's securities regulator.
Santander priced the IPO in the middle of its expected range of 22 reais to 25 reais.
Santander priced its US traded shares at $US13.50 each, according to an underwriter of the offering.

The IPO capped months of torrid activity in Brazil's stock market, which had 21.76 billion reais in share sales since late June.

The offering may also benefit from growing appetite for emerging market securities that has helped push the benchmark Bovespa index 68 per cent higher so far in 2009.
Banco Santander (Brasil) SA, a unit of Spain's Santander, will list the units in the form of American depositary shares (ADSs) on the New York Stock Exchange under the symbol "BSBR" and in Sao Paulo under the symbol "SANB11."

The IPO was the largest ever for a Brazilian company, beating the offering by credit card processor VisaNet in and the biggest in the world since Visa Inc's offering in March 2008.
Santander is the third largest private-sector bank in Brazil by assets, with a 10.2 per cent market share, behind Itau Unibanco and Bradesco.

The bank has expanded with six takeovers in Brazil the past 12 years, including the acquisition of Sao Paulo state bank Banespa in 2000 for 7 billion reais.

Santander purchased ABN Amro's Banco Real unit in Brazil in 2008 as part of its €70 billion ($A115.7 billion) bid for the Dutch firm with Royal Bank of Scotland and Belgian-Dutch Fortis.
The Brazilian unit has emerged as one of the most profitable parts of Santander, accounting for 20 per cent of its net income in the first half of 2009.

Banco Santander expects net IPO proceeds of $US6.8 billion ($A7.6 billion), and will use about 70 per cent of the funds to expand its network of branches and install automatic teller machines.
It will also use some of the proceeds to improve its capital ratios, according to its US regulatory filing.

Banco Santander had 3,603 full-service branches and smaller service centres in Brazil as of December 2008.

In the six months ended in June 2009, Santander's Brazilian unit reported net interest income of $US5.5 billion and profits of $US1.25 billion.

Source: http://www.businessspectator.com.au/bs.nsf/Article/UPDATE-1-Santander-raises-805-bln-in-record-Brazil-WKV5B?opendocument&src=rss