Santander Order Book Bulges

Santander Brazil is poised to raise up to BRL15.6bn in its IPO today. The bank is offering 525m shares, an amount that can be increased by 75m in greenshoe shares and 25m in hot issue shares. Pricing is slated to fall somewhere between BRL22.00-BRL25.00. If it prices the deal at the BRL23.50 midpoint of the range, Santander would raise BRL14.7bn. US-based investors say the order book for the deal is heard subscribed by more than 5x, which indicates the issuer may have a comfortable margin to price near or at the top of the range. Bankers off the deal and investors concur, saying they expect pricing to come somewhere in the top half of the deal, but don’t expect the price to rise above the stated range. One investor is hopeful for a pop in the share price Wednesday, when they begin to trade, given the strong demand and the fact the bank and its investment banks will be focused on ensuring investors do well in the offering. Executives involved in the trade say that if Santander prices its offering at the midpoint of the range, its valuation on a 2010 P/E ratio would stand at a discount of 13% to Bradesco’s in the comparable period. If the offering is priced at the top of the range, Santander’s PE would be higher than Bradesco’s, adds an investor on the deal. On a P/B basis, a midpoint pricing suggests a 19% discount to Bradesco and a 30% discount to Itau Unibanco, using 2009 figures, note sellsiders. The deal is being led by Santander, Credit Suisse, BofA Merrill and BTG Pactual.