--Santander's Mexican unit begins trading in New York
--Shares advance 4.4% in early action
--Deal brings more than $4 billion to Spanish parent
By Chris Dieterich
U.S.-listed shares of Grupo Financiero Santander Mexico SAB de
CV (BSMX, SANMEX.MX) edged higher Wednesday in their public trading
debut, in what was the biggest listing to hit U.S. exchanges since
Facebook Inc. (FB) in May.
Santander Mexico's American depositary receipts rose more than
3% to $12.60 in their first trade on the New York Stock Exchange,
up from their $12.18 offering price. At midmorning, shares were up
54 cents, or 4.4%, to $12.72.
Banco Santander SA (SAN, SAN.MC) sold a nearly 25% stake in its
Mexican banking unit in a dual listing in New York and Mexico City
that will bring the parent bank between EUR2.77 billion and EUR3.18
billion ($3.57 billion to $4.10 billion), depending on the final
number of shares sold. Most of the investor cash bought U.S.
shares. Some 238 million ADRs were expected to hit the market
Wednesday morning, although the deal's underwriters had the option
to increase that figure through what is known as an overallotment.
Among new U.S. listings this year, Santander Mexico will rank in
size behind only Facebook's $16 billion launch in May, according to
Dealogic.
Marcos Martinez Gavica, chief executive of Santander Mexico,
attributed the investor enthusiasm to "optimism about Mexico."
"While the world is complicated, and while the U.S. isn't
growing as fast, domestic demand is allowing the country to grow in
a very solid way and with a great macroeconomic stability," he
said.
Ahead of the initial U.S. trade, dozens of floor brokers huddled
around market-maker Getco LLC's trading post in New York, calling
out final orders for institutional clients, as underwriting bands
gauged demand.
Kenny Polcari, managing director at broker iCap Corporates, said
the pricing went well, as shares got "a little pop, but not too
much."
On the Mexican Stock Exchange, the shares posted smaller gains,
to 32.76 pesos each ($2.55), up about 2.4% from the sale price.
Each U.S.-listed ADR represents five Mexican shares. Late Tuesday,
Banco Santander, which is based in Madrid, priced the Mexico City
shares of its Mexican unit at 31.25 Mexican pesos, a deal that
values Santander Mexico at about EUR12.8 billion ($16.5
billion).
The IPO saw 19% of the stake listing in Mexico City and 81% on
the Big Board.
Santander Mexico represents 12% of its parent's profit,
according to Morningstar, and has a firm foothold in Latin
America's second-largest economy by gross domestic product.
Santander has marketed the Mexican unit as an opportunity for
investors to reach a growing economy with a young population and a
relatively low level of banking services.
The proceeds from the offering will be used to shore up the
capital position of the parent bank, which retains a 75% stake.
The Santander Mexico deal represents the largest U.S.
financial-sector listing since October 2009, when Santander Spain
raised $7.5 billion in a similar dual listing of its Brazilian unit
on the NYSE and in Sao Paulo.
--Amy Guthrie in Mexico City contributed to this article.
Write to Chris Dieterich at
christopher.dieterich@dowjones.com.