Criteria Caixa Shares Jump on Debut

Shares in Spain's Criteria Caixa, a unit of the country's biggest savings bank La Caixa, started trading at 5.44 euros in Madrid Wednesday, a 3.6% premium on their initial public offer price of 5.25 euros.

Criteria Caixa set the final fixed price for the IPO Monday, near the bottom of its price range of between 5 and 6.75 euros, valuing the company at up to 22.2 billion euros ($31.29 billion).

A Criteria Caixa official said the pricing lured La Caixa clients to become shareholders and helped offset the negative psychological effects of the recent market turmoil.

"There is a lot of volatility in the market, institutional investors have been waiting until the last few days to place their orders," Francesco Reynes, Director at Criteria Caixa, told "Power Lunch Europe."

Criteria Caixa Shares Jump in Spanish Debut

Criteria Caixa, Spain's biggest debut this year, said on its Web site that it has the largest industrial portfolio in Spain which, along with its financial portfolio, exceeded 24 billion euros at 30 June 2007.

La Caixa will use the money to free itself of debt and finance future acquisitions, mainly in the banking sector in Central Europe, the US and Asia, Reynes said.

Criteria Caixa's shares eased in mid-morning, trading 1.5% higher at 5.33 euros. They softened further to 5.3 euros in the afternoon.

Analysts said Criteria Caixa was a good long-term bet.

"Certainly the funds they get from the IPO will boost the balance sheet and provide them with a lot of opportunities in Latin and South America," Bob McDowall, senior research analyst at TowerGroup, told "Worldwide Exchange."

Barcelona-based, unlisted La Caixa, floated around 20% in Criteria Caixa, which holds all its stakes in industrial and financial companies.

Economists say other, smaller savings banks may follow La Caixa's lead and try to expand abroad as part of efforts to diversify their business.