Banco Santander Brazil: Beware the Buzz

Updated with fresh stock quote, volume numbers.

NEW YORK (TheStreet) -- Banco Santander (STD Quote) got a warm institutional reception for the initial public offering of its Brazilian operations, raising 14.1 billion reais ($8.1 billion), but retail investors may want to hold off for a while, possibly until Carnival swings back around again next year.

The Brazilian unit sold a total of 600 million units for 23.50 reais ($13.43) apiece. With demand exceeding the original plans to offer 525 million units, the proceeds were above the company's expectations of $6.8 billion, and enough to rank the debut as both the biggest IPO in Brazil's history and the largest on a global basis since Visa(V Quote) went public in March 2008. The pricing was around the midpoint of the expected range of 22 reals to 25 reais ($12.37 to $14.06 per ADR). The Spanish banking giant sold the shares of Banco Santander Brazil SA (BSBR Quote)to the public through a concurrent offering in Brazil and New York.

The stock opened on the Big Board at $13.30, and was most recently trading at $13.06, down more than 2%. Volume reached 82 million at midday, but roughly 60% of the trading occurred in the first 30 minutes of Wednesday's session.

At that level, the shares looks right priced to Maclovio Pina, an equity analyst with Morningstar, who estimates the stock is fairly valued at around $13. He doesn't see any reason for investors to dive in the first day if the shares are trading higher than that. His concerns in the near term are about the continued stabilization of the Brazilian economy, which appears to be on track, and the company's current allowance for non-performing loans, which is below that of competitors.

"They are a bit more at risk since the percentage of their loans that are non-performing is higher than their competitors while their reserves are lower," Morningstar's Pina told TheStreet.