Santander Targets Early December for Chile FO

Santander Chile is targeting the week of December 5 for a secondary share equity follow-on that is expected to raise close to $1bn. The Spanish parent is looking to sell 7.8% of the Chilean unit held by the Teatinos Siglo XXI Inversiones vehicle, to strengthen its capital position, as part of a larger selldown that also involves reducing its stake in its Brazilian operation. But completing a deal before the year-end could prove tricky given the size of the transaction and questions over whether Santander Spain will be forced into further sales in the future. “In this scenario, with a weak progress in the operational indicators and the possibility of selling a larger stake if the Spanish situation should deteriorate further in the future, it is unlikely that we will see a significant participation from [domestic] institutional buyers,” local Chilean shop BCI says in a report. With Santander looking to sell 14.74bn shares, represented by 14.19m ADS, the transaction could reach $930m in size based on Tuesday’s closing ADS price of $65.50. Official timing has yet to be released, but sources familiar with the deal say the issuer is considering the week of December 5, if market conditions allow. The offer is to include an international and domestic portion. Santander, Bank of America Merrill Lynch and Credit Suisse are managing the international portion, while Santander and LarrainVial will handle Chilean orders. The announcement follows the renewal of a shelf to sell secondary shares of Santander Brasil. Santander could sell up to 8.2% of the Brazilian unit in a transaction that would fetch north of $2bn, though it has yet to specify any offering plans. ECM bankers away from Santander who have worked on previous transactions for the bank say the Brazil selldown could come in several small pieces – as the bank has been doing – or through a sizable marketed follow-on such as Santander Chile’s. However, such a deal would be unlikely due to poor overall market conditions an