Banco Santander's Brazilian IPO Raises $8.1B

Spanish financial giant Banco Santander SA has raised $8.1 billion with an initial public offering of shares in its Brazilian subsidiary, the largest IPO in the world this year.

In an effort to expand its Latin American operations, the bank sold shares in Banco Santander Brasil SA, in the United States and in Brazil, where the offering was that nation's biggest offering ever — eclipsing VisaNet's $4.3 billion offering last year.

American Depository Receipts trading in New York fell 39 cents, or 2.9 percent, to close at $13.01 Wednesday.

The initial weakness in the U.S. trading is probably because the bank priced shares in Brazil and didn't offer the usually customary discount on what was essentially a secondary offering in the U.S., said Francis Gaskins, president of IPOdesktop.com.

Santander fully priced the stock in the U.S., which allowed the bank to pocket profits on the stock sale instead of a discounted price that may have led to a rise in the share price on Wednesday, Gaskins said.

Santander's Brazilian shares slipped 2.6 percent in their trading debut on the Bovespa exchange in Sao Paulo, and closed at 22.62 reals ($12.94) each in Wednesday trading.

The bank is trying to take advantage of one of the world's fastest growing and developing economies to gain a foothold in the region. Banco Santander plans to use 70 percent of money raised to open new branches and install ATMs as well as to fund increased credit transactions in its commercial banking and global wholesale banking segments. Santander is Brazil's third largest private sector bank behind Itau-Unibanco and Bradesco.

Brazil was one of the last countries hit by the economic meltdown and was able to recover quickly because the government put in huge tax breaks. Economists expect the economy to grow between 3.5 percent and 5 percent in 2010.

The economy is likely to get additional boosts in the coming years as the country upgrades infrastructure and welcomes tourists as it plays host to soccer's World Cup in 2014 and Rio de Janeiro hosts the 2016 Summer Olympics, which it was awarded last week.