March 28, 2017 / 1:33 PM / a year ago

UPDATE 3-Santander Brasil slumps as Qatar fund seeks partial exit

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By Bruno Federowski and Guillermo Parra-Bernal

SAO PAULO, March 28 (Reuters) - Shares in Banco Santander Brasil SA fell the most in intraday trading in almost four months on Tuesday after Qatar’s sovereign wealth fund filed to sell a 2.25 percent in Brazil’s fourth-largest listed lender.

The bank informed regulators that Qatar Investment Authority had put as many as 80 million units up for sale in a so-called restricted-efforts offering. Units are a blend of common and preferred shares and are the bank’s most widely traded class of stock in Brazil.

With the transaction, the sovereign wealth fund, known as QIA, would liquidate 40 percent of the 5.5 percent stake it holds. Fund managers and analysts said QIA’s move comes after a rally that nearly doubled the price of Santander Brasil’s units .

They shed as much as 6.5 percent to 28.62 reais in midday trading, reaching their lowest level this year. Speculation of an offering had driven the stock down from near all-time highs since the second week of March, traders said.

Investors have been puzzled by the 86 percent rally in Santander Brasil over the past year, which made it Latin America’s most expensive bank. Bets against the stock have increased, on views their value seems unrealistic compared with larger peers.

Currently, none of the 13 analysts covering Santander Brasil recommend the stock as a “buy,” Thomson Reuters data showed. Investors shorting Santander Brasil pay over 20 times what they do to bet against larger rivals Itaú Unibanco Holding SA or Banco Bradesco SA.

The slump led losses in Brazil’s benchmark Bovespa stock index on Tuesday. An index tracking shares of banks and financial companies on the São Paulo Stock Exchange is up about 12 percent this year.


Based on Monday’s closing price, the offering could raise as much as 2.8 billion reais ($896 million) for QIA, provided it chooses to exercise an additional allotment of 12 million units.

In a statement, QIA said it expects to remain Santander Brasil’s second-largest shareholder after the stake sale. Each unit corresponds to a blend of one common and one preferred share in the bank, the local subsidiary of Spain’s Banco Santander SA.

QIA entered Santander Brasil seven years ago, around the time the lender became a public company in June 2009. At the time, Santander Brasil’s initial public offering raised 13.2 billion reais.

Santander Brasil’s investment banking unit will manage the offering, alongside those of Bank of America Corp and Credit Suisse Group AG.

The sale, known as a public offering with restricted efforts, differs from standard equity offerings in that QIA does not have to request registration of the plan with securities industry watchdog CVM. Only qualified investors can participate, and the deals cannot be marketed through road shows or the media.

$1 = 3.13 reais Editing by Jeffrey Benkoe and Dan Grebler

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