Santander Consumer USA, the American auto-lending arm of the Spanish banking giant Grupo Santander, has raised its expectations for its coming initial pubic offering, according to a regulatory filing made on Wednesday.
The company’s private equity investors, which include Kohlberg Kravis Roberts, Centerbridge Partners and Warburg Pincus, plan to sell about 75 million shares at $24 to $25 each. That compares with earlier estimates of 65 million shares at $22 to $24 each. The new figures would raise up to $1.88 billion, compared with $1.56 billion based on the earlier numbers.
The company’s underwriters, which include JPMorgan Chase and Citigroup, also have the option of purchasing an additional 11.25 million shares, which means the I.P.O. could raise more than $2 billion.
Shares in Santander Consumer are expected to be priced after the market closes on Wednesday, a day earlier than originally expected, and open for trading on the New York Stock Exchange on Thursday under the symbol SC.
In 2011, Grupo Santander announced a $1.15 billion deal to sell a 35 percent stake in its auto-lending business to a consortium that included its current investors.
Santander also plans to allow small investors the chance to invest through Loyal3, an online startup that allows individuals to invest as little as $10 a month toward the purchase of a company’s stock.
Since its founding in 1995, Santander Consumer USA has become a leading originator of auto loans in the United States. In February, it paid Chrysler $150 million to become the company’s preferred provider for the next decade.
Santander Consumer reported net income of $715 million in 2012, a 7 percent drop from profit in 2011 but a 75 percent increase from profit in 2008, driven in large part by a growth in auto lending.
Santander Consumer works with nearly 14,000 dealerships across the country and provides loans to both prime and less credit-worthy borrowers. It keeps some of those loans on its own books and bundles others into securities it then sells.
In 2012, retail installment contracts generated $2.2 billion in income for Santander Consumer, compared with $1.4 billion in 2008. Income from purchased receivables portfolios was down 19 percent, to $704 million, in 2012 but still up more than 500 percent from 2008. The market for securities backed by such loans has also strengthened, which last year helped lift overall auto loan originations to their highest levels since 2007.
Many dealerships offer in-house financing to car-buyers, making them something of a one-stop shop. The dealerships can then sell the loans to a third-party lender and typically make up to 2 percent on the mark-up.
