Santander Consumer USA is planning to raise at least $50 million in an initial public offering, according to filings with the United States Securities and Exchange Commission. The lender, which is the company behind Chrysler Capital, also intends to pursue relationships with other carmakers. Santander Consumer USA said in the filings that it intends to expand its existing OEM relationships and “develop future relationships with other OEMs to drive incremental origination volume."
The company historically has been a subprime and near-prime lender that specializes in used-vehicle financing. The lender’s auto lending practices, however, have changed since it inked a ten-year deal in February 2013 with Chrysler Group LLC to originate private-label loans and leases under the Chrysler Capital brand. Chrysler Capital commenced operations on May 1, 2013 in the US as the quasi-captive finance arm of Chrysler. New vehicles accounted for around 40 percent of Santander Consumer originations in May 2013, up from an average of between 10 percent and 20 percent.
According to Santander Consumer USA, it acquired over $900 million of Chrysler Capital loans, $200 million in Chrysler Capital leases, and around $9 million in Chrysler Capital wholesale loans to dealers in May 2013. Santander Consumer USA said it expects most of its growth to come from the Chrysler relationship in the short term. The lender purchases auto loans from around 14,000 dealers in the US, covering all brands. Santander Consumer USA’s direct-to-consumer auto loans have also become a profitable business for the company.
Dallas-based Santander Consumer USA is 65-percent owned by Banco Santander. Private equity funds affiliated with Warburg Pincus LLC, Kohlberg Kravis Roberts & Co. L.P., and Centerbridge Partners L.P. controls 25 percent of Santander Consumer USA. Santander Consumer USA chief executive Thomas Dundon owns around 10 percent of the company. [source: automotive news - sub. required]