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| Santander Mexico | |
| Date | September 25 |
| Size | $4.1 billion |
| Structure | IPO |
| Bookrunners | Santander, Bank of America Merrill Lynch, Deutsche Bank and UBS were the global coordinators. Barclays, Citi, Credit Suisse, Goldman Sachs, Itaú, JPMorgan and RBC were joint bookrunners |
| return to the Latin America Deals of the Year index | |
One of the big equity themes in Latin America in 2012 was that issuance from companies outside Brazil, and from Mexico in particular, enjoyed a strong year. Santander Mexico’s $4.1 billion IPO is one of the deals of the year because of its size and its secondary markets performance. In a domestic market dominated by foreign banks, Santander’s local listing is an important development for the bank and the market. It was the third-largest IPO in the world in 2012 and the second-largest-ever SEC-registered IPO by a Latin American issuer (behind Santander Brazil’s 2009 IPO). It also performed very well in the secondary markets. Contrasting with the two larger IPOs in 2012 – those of Facebook and Japan Airlines – the deal was trading up after five days and is still above the launch price (by 13%) at the time of going to press. Speaking to Euromoney immediately after the deal launched, underwriters said Santander, which was left lead, would have lost some of the large bids from long-only accounts had it tried to move the price above the middle of the range. It therefore opted to price at the middle of its Ps29 to Ps33 range to generate Ps52.81 billion. The global marketing effort incorporated anchor sales to sovereign wealth funds and a 14-day roadshow schedule, with three teams visiting 384 investors in 24 cities.
The marketing of the deal, which is Mexico’s largest ever IPO, and the secondary market performance, helped the end of 2012 to be an exceptionally active one for Mexican equities. It also repositioned the Mexican financial sector as a whole, with Banorte trading 4.7% up during the roadshow. Santander meanwhile discounted to that only other comparable listed bank in Mexico: Banorte. The mid-point implied a valuation of a 2013 price/earnings ratio of between 10 and 11, compared with 12 for Banorte. The deal reportedly attracted $20 billion in orders. Santander, Bank of America Merrill Lynch, Deutsche Bank and UBS were the global coordinators. Barclays, Citi, Credit Suisse, Goldman Sachs, Itaú, JPMorgan and RBC were joint bookrunners.
The price implied a valuation of €13.71 billion for 100% of Santander Mexico. In the first half of 2012 the bank’s profit attributed to the group was €556 million, up 14.4% on the first half of 2011 and was Santander’s third-highest-reporting business after Brazil (€1.15 billion) and the UK (€566 billion). Santander said the IPO was not driven by its need to increase tier 1 capital, but the IPO capital raised this by 55bp.
