Spanish Banking Giant Raises $8 Billion in Brazil

The exact amount raised was 14.1 billion Brazilian reals ($8.05 billion) from an IPO which saw 600 million units sold at a price of 23.50 reals each. According to the Wall Street Journal each unit consists of 55 common shares and 50 preferred shares. The Journal also says that because the market already held 1.98% of the Brazilian unit's shares, it now owns 18%, using the term IPO to describe the offering is not technically correct. But it is the term being applied across the media to an offering which attracted investors from the U.S. as well as from Brazil itself. It is reported by the New York Times that Santander's initial intention was to offer 525 million units for sale but such was the demand from investors that another 75 million units were added to the offering. Despite the popularity of the offering the eventual unit price came in below market expectations that were nearer 25 reals each. Those shares traded in the U.S. came in at $13.5 each, a figure slightly above the price anticipated by Morningstar equity analyst Maclovio Pina who considered $13 to be "fair value". Santander's Brazilian operation is reportedly one of its most profitable, providing the group, which is named after the Northern Spanish city in which it is based, with 20 percent of its net income during the first six months of 2009. The net interest income enjoyed by the bank's operation in Brazil during those six months was $5.5 billion, with profits of $1.25 billion. There are some 3,600 Santander branches in Brazil, there are plans for as many as another 600, and the bank has 21 million customers in a country whose population is thought to exceed 191 million. Santander is Brazil's third-largest private bank, with a 10.2 per cent market share, the largest bank in the country being the state-controlled Banco do Brasil. Visanet, a credit card processing company, had the largest IPO seen in Brazil, that offering was only in June, prior to that of Santander. And the Santander IPO was the world's largest since March 2008 when Visa Inc. had an offering. On its website Santander reports that it was the world's third largest bank in 2008 in terms of profit, with a nine per cent increase in profit from 2007. Europe and Latin America are its main spheres of operation.