Santander Consumer seeks $8.4 bln valuation in IPO-Reuters

(Reuters) – Santander Consumer USA Holdings Inc , the U.S. consumer-finance arm of Spanish lender Banco Santander SA, is seeking a valuation of up to $8.4 billion in an initial public offering.

The company, which focuses on auto loans, said it expects the IPO to raise up to $1.56 billion, based on the sale of 65.2 million shares priced at between $22 and $24 per share.

Shareholders will sell all of the shares being offered. Santander Consumer will not receive any of the proceeds, it said in a filing with the U.S. Securities and Exchange Commission on Thursday.

Dallas-based Santander Consumer is 65-percent owned by Banco Santander. An investment vehicle managed by private equity firms Centerbridge Partners LP, Kohlberg Kravis Roberts & Co and Warburg Pincus LLC owns about 25 percent.

The offering will reduce the fund’s holding to about 10 percent. The fund, which acquired the stake for $1 billion in 2011, is offering the majority of shares in the offering.

Santander Consumer Chief Executive Thomas Dundon owns 10 percent of the company.

The lender entered into a 10-year agreement with Chrysler Group LLC in 2013, through which it originates loans under the Chrysler Capital brand.
U.S. auto industry sales are expected to grow by 1 million vehicles to 15.5 million this year as manufacturers expect to report some of their highest sales since 2006.

Santander Consumer, which offers loans through 14,000 car dealers across the United States, said there were about $850 billion worth of auto loans and leases outstanding in the country as of Sept. 30.

The company has been profitable every year for the past 10 years and posted net income of about $582 million for the nine months ended Sept. 30.

Banco Santander, Spain’s largest lender, has been selling off assets as it weathers a deep recession in its home country. In 2012, the bank raised about $4 billion after it sold a portion of its Mexican unit.

IPO activity surged last year as low interest rates and a surging stock market enticed investors. Companies raised $159.7 billion from IPOs globally, a 37 percent increase on 2012, and bankers expect 2014 to carry on where 2013 left off.

Santander Consumer will list on the New York Stock Exchange under the symbol “SC”.

Citigroup and J.P. Morgan are the lead underwriters for the offering.