Santander Consumer USA, the lender behind Chrysler Capital, plans to raise at least $50 million in an initial public offering and pursue relationships with other automakers, according to documents filed with the Securities and Exchange Commission.
"We plan to expand our existing OEM relationships and develop future relationships with other OEMs to drive incremental origination volume," the company said.
Santander Consumer USA historically has been a subprime and near-prime lender specializing in used-vehicle financing. Its auto lending practices have changed since Santander entered into a ten-year agreement in February with Chrysler Group LLC to originate private-label loans and leases under the Chrysler Capital brand.
More new cars
In May, new vehicles accounted for about 40 percent of Santander Consumer originations, up from an historical average of 10 percent to 20 percent, the company said. Santander said it acquired over $900 million of Chrysler Capital loans, $200 million in Chrysler Capital leases, and about $9 million in Chrysler Capital wholesale loans to dealers in May.
In the short term, Santander said it expects most of its growth to come from the Chrysler relationship.
Santander buys auto loans from about 14,000 U.S. dealers, including all brands, the company said. Santander also has a growing business making direct-to-consumer auto loans.
Spain's Banco Santander owns about 65 percent of Santander Consumer USA, which is based in Dallas. Private equity funds affiliated with Warburg Pincus LLC, Kohlberg Kravis Roberts & Co. L.P., and Centerbridge Partners L.P. own about 25 percent, a stake that was acquired in October 2011 for $1 billion.
CEO Thomas Dundon owns about 10 percent; other Santander executives own a total of less than 1 percent, according to the SEC filing.
The IPO likely will dilute those holdings, but it is still to be determined how much.
That depends on how many shares are sold, and who buys them. Pricing is also to be determined. The SEC filing put a value of $50 million on the IPO, but that's a placeholder until pricing and other relevant details are announced.