Santander Offers Details of $1.8 Billion IPO, Including More Prime Business

Santander Consumer USA Inc.  revealed details of its $1.8 billion, 65.2-million-share initial public offering today in an ammended S1 filing.  The IPO would value the company at $8.4 billion.  The original SEC document was filed July 3, 2013.

Shares would initially be priced between $22 and $24 each. Underwriters will have an additional 30-day option to buy another 9.8 million shares from the selling stockholders.

The lender has applied to be listed on the New York Stock Exchange under the symbol “SC.”

In addition to its existing relationships with Chrysler, CarMax and other partners, Santander Consumer USA plans to diversify its financing products and increase the volume of its new-vehicle financing in the prime space, according to today’s SEC filing. Through September 2013, more than 80% of the lender’s loans were subprime. With a greater focus on prime lending, a larger proportion of SCUSA’s business will consist of loans for which it has less flexibility to adjust pricing to absorb losses.

With SCUSA’s Chrysler Capital endeavor, which started in May 2013, new-vehicle financing as a percentage of overall originations has increased to more than 40% from the 10%-to-20% range, historically.

Santander said its technologically-driven platform had enabled it to add more than $34 billion of assets to its lending platform since 2008, and it continues to evaluate opportunities for additional acquisitions.

A separate SEC document, filed at yearend 2013, said that for the seven months ended Nov. 30, 2013, Chrysler Capital originated $6.7 billion retail installment contracts and $2 billion of leases, resulting in a penetration rate among Chrysler car buyers of 26.5%.

For the nine months ended Sept.30, 2013, SCUSA had $23.3 billion of loans and leases outstanding, up from $18.5 billion during the same period in 2012.

Santander, through Santander Holdings USA Inc., owns 84.3 million shares, or 65% of Dallas-based SCUSA, whilc SCUSA CEO Thomas Dundon owns a 10.5% share. (WIth the IPO, Dundon will have options to increase his share to 13.8%.) Funds managed by Centerbridge Partners LP, KKR & Co., and Warburg Pincus LLC own another 25% stake, though that stake will drop to 10% post-IPO.