Seeking Alpha

Santander's U.S. consumer unit files for IPO

  • Santander Consumer USA (SCUSA) - the U.S. consumer lender subsidiary of Banco Santander (SAN -0.6%) - files to raise up to $1.56B in an IPO, offering 65.2M shares at an expected range of $22-$24.
  • Following the IPO, the company plans a quarterly dividend of $0.15 per share, an annualized yield of 2.6% at the midpoint of the offering range.
  • The stock symbol will be "SC."
  • S-1
Comments (20)
  • Clayton Rulli
    , contributor
    Comments (3186) | Send Message
     
    anyone know if SAN shareholders get anything? Scusa shares?
    9 Jan 2014, 02:19 PM Reply Like
  • Clayton Rulli
    , contributor
    Comments (3186) | Send Message
     
    Do SAN shareholders get anything out of this? SCUSA shares?
    9 Jan 2014, 02:59 PM Reply Like
  • AlbionWood
    , contributor
    Comments (862) | Send Message
     
    Slogging through the S-1, it looks like SAN does not receive any proceeds or shares. This is an IPO of shares held by the minority owners (KKR, Warburg Pincus, etc) only. SAN shareholders won't receive anything directly from this IPO - if I read correctly.
    10 Jan 2014, 01:39 PM Reply Like
  • Tom Shaughnessy
    , contributor
    Comments (1149) | Send Message
     
    There are a lot of these by me, they are popping up all over the place
    9 Jan 2014, 03:57 PM Reply Like
  • CJoyce316
    , contributor
    Comments (105) | Send Message
     
    they bought sovereign bank in 08/09 at a steal of 2 dollars per share which was eastern coast NJ PENN etc and converted them over this year, then started advertising.
    9 Jan 2014, 06:08 PM Reply Like
  • idkmybffjill
    , contributor
    Comments (1756) | Send Message
     
    What does Santander actually do in America? I've never seen a single one lol. I guess they're not on the West Coast?...
    9 Jan 2014, 05:35 PM Reply Like
  • marynyc
    , contributor
    Comment (1) | Send Message
     
    They are not on West Coast.
    10 Jan 2014, 04:48 PM Reply Like
  • barbarahofer
    , contributor
    Comments (28) | Send Message
     
    Santander CONSUMER USA is everywhere due to the deal with Chrysler.
    Santander USA (former Sovereign) is only at the east coast.

     

    The IPO is for Santander Consumer USA.
    12 Jan 2014, 02:13 PM Reply Like
  • Terry Trover
    , contributor
    Comments (34) | Send Message
     
    They are not on the West Coast or Midwest. East Coast only.
    9 Jan 2014, 06:40 PM Reply Like
  • South Gent
    , contributor
    Comments (4252) | Send Message
     
    I am long SAN and SANPRB so I am monitoring this development involving the IPO of the U.S. consumer finance unit.

     

    Santander bought this U.S. consumer finance business in 2006 for $636M. It was then known as Drive Financial based in Dallas and was later renamed Santander Consumer USA. In 2011, Santander sold a 25% interest to two private equity firms for $1B.

     

    http://bit.ly/19gPIDi

     

    Currently, it is my understanding that SAN owns 65% of this business. At the top end of the $22 to $24 price range, the IPO will place a value on Santander Consumer USA at close to $8.5B.

     

    http://reut.rs/19gPLz0

     

    Initially, about 65.2M shares will be sold by the existing shareholders, with SAN selling some of its shares. Most of the shares are being sold by the three private equity firms who bought from SAN in 2011.

     

    I would call this investment by SAN a success.

     

    SAN's foray into U.S. retail banking was through its acquisition of Sovereign Bank in 2009 for about $1.9B after acquiring a 20% stake in 2006 for about $2.4B. The low 2009 price was due to the financial crisis. Sovereign operated in the NE.

     

    That bank has been rebranded to Santander Bank. As of 9/30/13, that U.S. bank had 706 branches as shown on a map found at page 11 of that U.S. bank's third quarter report:

     

    http://bit.ly/19gPLz1

     

    Net operating income can be found at page 20 of that report. For the 9 months ending 9/30/13, the U.S. Santander Bank had net income of $772M (page 22)
    9 Jan 2014, 07:29 PM Reply Like
  • jarco
    , contributor
    Comments (1753) | Send Message
     
    Thanks for the detailed and informative comment. SAN is the largest of my "mad money" ventures and an exciting ride so far. As mentioned, Sovereign is basically a Northeastern bank bought by SAN for chump change at the peak of the late 2000's economic tsunami. It's worth noting they had previously expanded into New England when a large acquisition in that area forced a partial sell-off of an acquirers branches at a then very attractive price. Again thanks for you input.
    10 Jan 2014, 11:12 AM Reply Like
  • Slick1313
    , contributor
    Comments (4) | Send Message
     
    Hey southgent--you sound pretty knowledgable about Santander so I thought I would also ask you about your thoughts on investing in San's IPO. I need to make a decision by tomorrow so I am a little anxious as I've registered but will need to confirm it. Thoughts??
    21 Jan 2014, 07:54 PM Reply Like
  • South Gent
    , contributor
    Comments (4252) | Send Message
     
    Slick: I am not interested in the Santander Consumer Finance IPO and will not be participating in the IPO.

     

    I currently own the common shares, SAN, and the equity preferred floating rate preferred SANPRB which pays qualified and non-cumulative dividends at the greater of 4% or .52% above the 3 month Libor rate on a $25 par value. I have bought SANPRB as low as $13 and still own those shares. I recently sold my highest cost 50 share lot of SANPRB and will mention that trade in my next blog.
    21 Jan 2014, 08:38 PM Reply Like
  • Slick1313
    , contributor
    Comments (4) | Send Message
     
    Hi
    would you invest in Santander's IPO if you were able to?
    22 Jan 2014, 01:11 PM Reply Like
  • AlbionWood
    , contributor
    Comments (862) | Send Message
     
    As a SAN holder this is of interest, but it is a little hard to make out whether I benefit directly. I guess it establishes a premium valuation for this subsidiary (more than 3x tangible book), which might help with SAN valuation. Mostly it looks like the private-equity partners cashing out part of their stake (while retaining a large interest).
    10 Jan 2014, 01:43 PM Reply Like
  • South Gent
    , contributor
    Comments (4252) | Send Message
     
    ALBION: Santander Consumer Finance will not receive any of the proceeds since the shares are being offered by the existing shareholders including a wholly owned subsidiary of Santander.

     

    Page 133 of the S-1 shows that a wholly owned Santander subsidiary called Santander Holdings USA will be selling some shares.

     

    A Reuters story that I cited below states that SAN will be selling about 20% of its shares.

     

    Santander has already booked a profit when it sold a 25% stake to those three firms for $1 Billion.
    10 Jan 2014, 02:23 PM Reply Like
  • AlbionWood
    , contributor
    Comments (862) | Send Message
     
    southgent - Well spotted. Santander Holdings will sell about 12 million shares, Sponsor Auto Finance Holdings LP will sell about 52 million, and the CEO about 2 million. Mostly it appears to be Sponsor Auto Finance cashing out, as their stake will go from 25% down to as little as 7.5%. Santander Holdings will go from 65% to 60% and the CEO goes from 12% to 12%.

     

    I'd be pretty happy to buy something for $636, sell 25% of it for $1,000 and have the remainder valued at $8,500. SAN did well here.
    10 Jan 2014, 05:30 PM Reply Like
  • Slick1313
    , contributor
    Comments (4) | Send Message
     
    just curious…if you had an opportunity to invest in Santander's IPO, would you?
    21 Jan 2014, 07:55 PM Reply Like
  • Slick1313
    , contributor
    Comments (4) | Send Message
     
    I am new to this-I have a chance to buy shares of the Santander Consumer USA IPO and went ahead and reserved an investment amount of 5,000. When I tried to lower this amount, I was told I could not and if I cancelled would not be able to reapply. Any thoughts out there? Am I crazy to invest and invest this amount??

     

    Any thoughts would be greatly appreciated…thanks
    21 Jan 2014, 07:58 PM Reply Like
  • Strike
    , contributor
    Comments (1698) | Send Message
     
    If you want the definitive Blog on SAN you should access the following link:

     

    http://bit.ly/1c3flT9

     

    New contributors are more than welcome.
    11 Jan 2014, 05:48 AM Reply Like
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