How Does an Argentine Bank IPO Sound?

Before readers think that this may be a hoax, it is not. How would most investors feel about buying into an Argentine financial group that owns a bank? After all, the financial history of Argentina is not currently considered a very bright spot.

Supervielle Group S.A. filed a Form F-1 with the U.S. Securities and Exchange Commission (SEC) regarding its initial public offering (IPO). There were no pricing details mentioned in the filing but the offering is valued up to $100 million, although this number is normally just a placeholder. The company intends to list its American Depositary Shares (ADSs) on the New York Stock Exchange (NYSE) but has yet to decide on a ticker symbol.

The underwriters for the offering are Morgan Stanley, Merrill Lynch, and Raymond James.

This is a private, domestically-owned financial group with a long-standing presence in the Argentine financial system and a leading competitive position in certain attractive market segments. It is controlled by the Supervielle family, which entered the Argentine banking sector in 1887. Supervielle owns the fifth-largest Argentine private domestically-owned bank in terms of assets.

Supervielle maintains a strong geographic presence in Buenos Aires and the Greater Buenos Aires metropolitan area, which is Argentina’s most commercially significant and highly populated area, and it claims to be a leader in terms of the banking network in some of Argentina’s most dynamic regions, including Mendoza and San Luis.

The bank, which consolidated with CCF, is the main asset, comprising 97.4% of the company’s total assets, and has a history of strong growth and robust profitability, reporting return on average shareholders’ equity (ROAE), of 28.3% on average for the 2010-2014 period, compared to an average of 27.6% for private banks in Argentina for the same period according to the Central Bank. In the nine-month period ended September 30, 2015, the bank reported a ROAE of 19.9% compared to 28.6% for private banks in Argentina for the same period according to the Central Bank.

As of September 30, 2015, Supervielle served over two million customers, and its assets totaled approximately $3.0 billion, in addition to roughly $510 million of assets managed by SAM. As of September 30, 2015, the bank and CCF accounted for 89.4% and 8.0% of our total assets, respectively.

The company intends to use the net proceeds from the offering to expand and strengthen its position in the Argentine financial system.