By Mark Mulligan in Madrid, David Oakley in London, and Justine Lau
Published: October 7 2009 01:34
Santander of Spain, the eurozone’s biggest bank by market value on Wednesday raised $7bn from the listing of its Brazilian subsidiary in the world’s largest initial public offering this year.
The huge IPO – in which Santander floated 14 per cent of the enlarged capital of its Brazilian business – provided further proof that IPOs are coming back to life after 18 moribund months in the wake of the financial crisis.
“The IPO markets are really starting to pick up in a big way,” said Michael Lavelle, co-head of European Capital Markets at Citigroup. “The rebound in equities, and hopes they will continue to move higher have brought the market back to life around the world.”
There have been $10bn worth of deals so far this month, putting it on course to surpass September's $20.2bn total, which in turn was the busiest month since March 2008 when $25.1bn was raised, according to Dealogic.
Big deals this month include Poland’s first benchmark offering – a fundraising of more than €500m ($736m) – since last November. PGE, the country's largest power utility, announced plans to raise €1bn on Warsaw’s stock exchange.
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Russia on Wednesday also saw its first IPO announcement since April 2008, although the deal from Human Stem Cell Institute, a biotech company, is only a small listing of Rbs700m ($23.5m) on Micex, Moscow’s rouble-denominated exchange.
The Santander deal will be worth slightly more than $8bn, if there is extra demand for the shares, surpassing the $7.3bn July listing of China State Construction Engineering in Shanghai.
The IPO is the biggest ever share offering in Brazil, eclipsing the $4.3bn equity-raising by VisaNet, the credit card operator’s Brazilian affiliate. It netted the Spanish lender €1.43bn in capital gains, which it will assign to provisions.
Santander, one of the few banks in Europe to emerge largely unscathed from the global financial crisis, bought Brazil’s Banco Real as part of the break-up of ABN Amro in 2007 after a series of acquisitions in the country. The takeover doubled the size of its Brazil operations and the country now contributes one fifth of the parent bank’s net profit at a time when the Spanish economy is mired in deep recession.
The sale gives the Brazilian arm of Santander a market value of €34.2bn, or $50bn, about the same as that of Deutsche Bank or Société Générale.
Santander priced the units, representing underlying ordinary and preference shares, at R$23.5 apiece.
The bank, which filed to sell 525m units, said the dual São Paulo and American Depositary Receipts offering would raise $8.05bn, assuming an over-allotment of 75m units was included.
Copyright The Financial Times Limited 2009.
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