Grupo Financiero Santander Mexico now is the 82nd largest bank in the world by market capitalisation. The price of the offering of shares of Santander's Mexican subsidiary has been set at 31.25 Mexican pesos ($2.437) per share, valuing Santander Mexico at €12.782 billion or $16.538 billion.
The volume of the operation represents 24.9% of the share capital of Santander Mexico, of which 21.7% has been sold. The remaining 3.2% is subject to the possible exercise of a 'green shoe option', that is, allowing the underwriting banks to acquire those shares within 30 days after the pricing of the offering on September 25
The value of the transaction will amount to between €2.768 billion and €3.183 billion, depending on the exercise of the green shoe. Santander said in a press note that it was “the largest equity offering in Latin America so far in 2012 and one of the largest in the world.
This transaction “marks a new era in the history of our bank in Mexico and strengthens our plans for expansion,” said Emilio Botín, chairman of Banco Santander.
The gains obtained by Banco Santander in this transaction will be fully allocated to reserves, in line with current accounting requirements. Banco Santander will continue to maintain control over its Mexican subsidiary.
This placement will translate into an increase in Banco Santander’s core capital ratio of about half a percentage point, assuming the green shoe is exercised in full. Banco Santander’s core capital at June 30, 2012 was 10.1% under Basel II rules.
Of the total shares sold, 81% were placed in the United States and elsewhere outside Mexico and 19% in Mexico. The American Depositary Shares of Santander Mexico will commence trading on the New York Stock Exchange on Wednesday September 26. The shares of Santander Mexico will continue to trade on the Mexican Stock Exchange
Emilio Botín pointed out that the transaction would underline the flexibility of Grupo Santander's model of subsidiaries, that are autonomous in liquidity and capital. “The IPO of our unit in Mexico is an important step in our strategy of having market listings for all our significant subsidiaries,” Botin said.