The Mexican arm of Banco Santander priced the U.S. portion of its initial public offering at about $12.18 on Tuesday, according to a person briefed on the matter, within its expected price range as the lender held one of the biggest stock sales ever by a Mexican company.
The unit, Grupo Financiero Santander México, sold additional shares on the Mexican Stock Exchange at 31.25 pesos each, at the middle of that offering's expected range. All told, the Spanish lender hoped to raise up to $4.2 billion through the dual listing.
When it begins trading on the New York Stock Exchange on Wednesday under the ticker symbol BSMX, Santander México will become the only Mexican lender listed on the Big Board. It is largely seen as a way to tap into that country's growth prospects, as investors hunt for ways to gain greater exposure to international markets.
Still, the offering for the unit was seen as a test for investors on a number of fronts. Its size, trailing only the likes of Facebook's $18 billion stock sale, was seen as potentially daunting at a time when the I.P.O. market has stagnated. The number of initial offerings priced this year has slid nearly 50 percent from 2011, according to data from Renaissance Capital.
And Santander México will still be closely tied to its parent, one of Spain's biggest banks and a closely watched proxy of that country's financial health. Santander is expected to control about 75 percent of the company, raising the prospect that it may flood the market with additional shares if it needs to raise more capital.
Neither its size nor its Spanish parent appeared to be a major hurdle for investors. Santander México's offering was about two times oversubscribed, estimated Scott Sweet, the senior managing partner of IPOboutique.com.
“Originally, I was concerned about the size,†Mr. Sweet said. “But as the road show took place, the conversion rates on orders was excellent.â€
I nvestors appeared to be enticed by Santander México's financial performance, which has outstripped that of the parent company. Its profit for the first half of the year rose 14.4 percent, to 556 million euros, benefiting from overall improvements in the Mexican economy.
“There are very few quality banks that hit the I.P.O. front, whether they be in the U.S. or abroad,†Mr. Sweet said.
Santander's overall first-half profit, meanwhile, slid 51 percent from the year-ago period, to 1.7 billion euros, as it continues to grapple with Spain's depressed economy.
Underwriters for Santander México sold about 20 percent of the bank's shares in Mexico, with the rest being sold internationally.
The Spanish lender has already taken its Brazilian arm public, raising about $7.5 billion. Santander said that it plans to hold I.P.O.'s for all of its biggest foreign subsidiaries within the next five years.
The Mexican stock sale is expected to bolster Santande r's capital ratios by about half of a percentage point.
The offering was led by Santander, UBS, Deutsche Bank and Bank of America Merrill Lynch.
