Santander Raises $8.05 Billion in Record Brazil IPO
Published: Tuesday, 6 Oct 2009 | 9:46 PM ET Text Size
By: Reuters
Banco Santander's Brazilian unit raised 14.1 billion reais ($8.05 billion) in a record initial public offering in Brazil and the largest IPO on a U.S. 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.

The size of the float will likely prevent the stock from having a robust first day jump on Wednesday, said one analyst.

"Most people that wanted the stock, got the stock," said Francis Gaskins, president of research firm IPO Desktop. "The size of the deal sopped up a lot of the demand."

The bank had filed to sell 525 million units, with each unit representing 55 common shares and 50 preferred shares, but the offering was increased 75 million units to meet demand from investors.

Santander priced the IPO in the middle of its expected range of 22 reais-25 reais in Sao Paulo, while U.S. traded shares were priced at $13.50 each, according to an underwriter of the offering.

"Looking at the long term prospects for Santander, which are very bright even considering short term challenges, the shares are fairly valued where they are," said Morningstar equity analyst Maclovio Pina, who had set a fair value price of $13 for Santander's U.S. traded stock.

Trading of the shares on Wednesday "would be more based on demand than where the fundamentals are heading," he added.

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 also benefited from growing appetite for emerging market securities that has helped push the benchmark Bovespa index 68 percent higher so far in 2009.

Santander Brasil, 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."

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