When Grupo Financiero Galicia agreed in late 2024 to acquire HSBC’s banking operations in Argentina, it confronted a familiar dilemma at uncommon scale. The estimated $1.1 billion purchase price had to be settled in a country still operating under tight capital controls, where sourcing hard currency is rarely straightforward. Settling part of the consideration with equity was hardly less daunting in a market that had seen virtually no meaningful follow-on issuance for years.
The solution was unconventional, technically demanding and market-reopening. Rather than issue fresh shares domestically, Galicia structured the transaction around American Depositary Receipts listed in the US, sidestepping local market constraints while tapping a deep international investor base. As part of the acquisition, HSBC received 11.7 million Galicia ADRs, equivalent to roughly 7.3% of the bank’s share capital. In June, the British bank sold that entire stake in a single overnight follow-on valued at $636 million, Argentina’s first sizeable equity placement abroad in nearly a decade.
The transaction, winner of the award for Equity Follow-On of the Year, was entirely secondary. No new shares were issued and existing shareholders suffered no dilution. The structure allowed HSBC to monetise its stake cleanly while increasing Galicia’s free float, improving liquidity and eliminating any lingering overhang from the acquisition at a critical moment for the bank’s equity story.
Execution risk was high. Argentina had not produced a transaction of this nature or scale since 2017, and global markets remained volatile. Yet the deal was carefully prepared over several months, with a tightly choreographed marketing process aimed at international investors already familiar with Galicia as one of the country’s most liquid stocks and a long-standing proxy for Argentine financial risk.
“Our stock is one of the most important in Argentina,” says Fabián Kon, chief executive of Grupo Galicia. “Along with YPF, Grupo Galicia has the highest volumes of trade among Argentinian equities. Investors know us well, and the placement was well received by the market.”
That familiarity mattered. Galicia has long been a core emerging-market holding for exposure to Argentina, and sentiment toward the country improved in the second half of 2024 as expectations of macro stabilisation and regulatory normalisation gained traction. By the time the follow-on launched, Galicia’s shares had risen sharply, reinforcing confidence in both the bank’s fundamentals and the recovery narrative.
Although HSBC was the formal seller, Galicia actively supported the transaction. Its management team joined the marketing effort, using the process to reinforce strategy following the HSBC acquisition and articulate growth expectations tied to scale, cross-selling and balance-sheet strength.
“We wanted to help the placement because it was tantamount to telling the market about our strategy, our results and our growth expectations,” Kon says. “We organized some 40 meetings with funds, and our team explained our strategy and performance with much detail.”
The result was a multiple-times oversubscribed book, with demand from long-only institutions and hedge funds. The deal priced at $54.25 per ADR, a discount of just over 5% to the prior close—tight by any measure given Argentina’s volatility and the size of the block. Lock-ups were imposed to support aftermarket stability and signal confidence from the remaining shareholder base.
Beyond execution, the follow-on carried wider significance. It was the largest equity capital markets transaction from Argentina in nearly a decade, reopening access to international equity markets and establishing a new benchmark for cross-border sell-downs from the country.
For Galicia, it was a critical step in consolidating a transformative acquisition. Before the deal, the bank ranked second among privately owned lenders. Absorbing HSBC’s retail banking, insurance and asset-management operations elevated it to the largest private bank by assets.
“In particular, HSBC had two businesses that interested us a lot,” Kon says. “One was affluent banking, where its Eminent brand is very well known. They also had a strong position in SMEs and corporates. We have purchased high-value assets and liabilities with low risk levels.”
The follow-on also broadened the shareholder base, increased liquidity and simplified the register, improving index eligibility and future market access. Galicia’s $636 million ADR sell-down completed HSBC’s orderly exit, strengthened Argentina’s flagship private bank and reopened a market many had written off.
Grupo Financiero Galicia $636 million Follow-On
Lenders: Morgan Stanley; Goldman Sachs
Counsel to Issuer: Gibson Dunn; Beccar Varela
Counsel to Lenders: Davis Polk; Salaverri Burgio Wetzler Malbrán
Selling Shareholder Counsel: Cleary Gottlieb; Bruchou & Funes de Rioja