Three PE firms–Warburg Pincus, Kohlberg Kravis Roberts and Centerbridge Partners–have bought 25% of Santander Consumer USA, the U.S. affiliate of Grupo Santander that provides automotive fiancing. The PE firm have invested $1 billion while Dundon DFS has put in $150 million. Deutsche Bank and Barclays Capital provided financial advice to the PE firms. UPDATED: Goldman Sachs along with Ken McPhail, David Adler and Varun Wadhawan of BofA Merrill Lynch advised Santander.
Santander Consumer USA will increase its capital by approximately $1.15 billion, with Sponsor Auto Finance Holdings Series, an entity held by funds affiliated with Warburg Pincus, Kohlberg Kravis Roberts and Centerbridge Partners, investing $1 billion in the company and Dundon DFS, approximately, another $150 million.
The transaction values the company at $4 billion. Following this transaction, Santander will realize a capital gain of approximately $1 billion. The capital gain will be fully allocated to reinforce the Group’s balance sheet.
Following this transaction, Grupo Santander will have a 65% stake in Santander Consumer USA 65%; Kohlberg Kravis Roberts, Warburg Pincus and Centerbridge Partners (through Sponsor Auto Finance Holdings Series) 25%; and Dundon DFS 10%.
Santander Consumer USA has assets of more than $16 billion, more than 2,000,000 customers and 2,800 employees. The company distributes loans through a network of more than 13,000 auto dealers. Santander Consumer USA registered a profit of $455 million in 2010.
The transaction is subject to obtaining the relevant regulatory approvals.