Santander To Raise $1.15 Bln Through Stake Sale In US Consumer Finance Unit

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Spanish bank Banco Santander S.A. (STD,BNC.L,BSBR,SAN) on Friday said it has reached a deal with private funds to sell 35 percent stake in its U.S. subsidiary, Santander Consumer USA Inc., to raise $1.15 billion in capital. The investments would consummate by the end of the fourth quarter, subject to the satisfaction of certain conditions.

Under the investment agreement, Sponsor Auto Finance Holdings Series LP - an entity held by funds affiliated with Warburg Pincus, Kohlberg Kravis Roberts & Co. L.P. and Centerbridge Partners L.P. - has agreed to buy 25 percent stake in Santander Consumer USA for $1 billion.

Dundon DFS LLC, a limited liability company affiliated with Thomas Dundon, the Chief Executive Officer of Santander Consumer USA, has agreed to invest another $150 million for a 10 percent stake.

Following the investment, Grupo Santander's stake in Santander Consumer USA will reduce to 65 percent.

The transaction, which is subject to regulatory approvals, values Santander Consumer USA at $4 billion. At present, the unit has assets of more than $16 billion and 2,800 employees. In the year 2010, the company registered a profit of $455 million.

The parties have also agreed to enter into a shareholders' agreement, which will provide each of Santander Holdings USA, Dundon DFS and Auto Finance Holdings with certain board representation and other rights with respect to their respective stakes.

In Madrid, Banco Santander is currently trading at 5.98 euros, up 0.12 euros or 2.08 percent, on a volume of 13 million shares.

STD closed Thursday's regular trading session at $8.13, down $0.10 or 1.22 percent.

BNC.L is currently trading at 520 pence, up 16 pence or 3.17 percent.

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