MEXICO CITY (Reuters) - Citigroup ( C/PN ) will look for more minority investors in its Mexican retail unit, Banamex, before launching a potential initial public offering, executives said on Thursday.

Citi will sound out top Mexican investors in the coming months, though it will look to sell stakes much smaller than the 25% that billionaire Fernando Chico Pardo will buy, Ernesto Torres, Citi's head of international, told journalists.

The lender announced on Wednesday that Chico Pardo, who chairs airport operator ASUR, would purchase the sizeable stake in Banamex for $2.3 billion.

STEP TOWARD BANAMEX EXIT

The deal comes after Citi struggled for years to find a buyer for Banamex, with a deal with conglomerate Grupo Mexico, controlled by billionaire German Larrea, falling through.

Analysts saw the announcement as a positive step toward Citigroup's ( C/PN ) complete divestment from Banamex.

The price of the stake values the full unit at around $9.12 billion, effectively creating a "floor" for an IPO, they said. Citi bought Banamex in a $12.5 billion deal in 2001.

"At least it gives clarity on how much a full divestiture could raise," said Mike Mayo, Wells Fargo's bank analyst, in a phone interview.

When asked by Reuters, Torres declined to provide more detail on Citi's decision to accept an offer below book value.

BANAMEX BACK IN MEXICAN HANDS

Locally, Chico Pardo's purchase was cheered, with Mexican President Claudia Sheinbaum praising the bank's return to Mexican hands after decades of foreign control.

Sheinbaum's predecessor and mentor, Andres Manuel Lopez Obrador, put conditions on any Citi deal, such as requiring the firm be majority controlled by Mexicans and prohibiting layoffs.

That interference led to Larrea scrapping his Banamex offer, sources told Reuters at the time. Sheinbaum, however, did not place any conditions, Chico Pardo said.

The businessman said that his purchase was self-funded and he would not look to grow his stake beyond the 25%.

"I consider this a very long-term investment, a transgenerational one. My children are going to have to carry this on," he said.

Chico Pardo admitted that he had not participated in the first round of bidding for the unit, as he "didn't understand it," but began talks with Citi in the past several months.

The businessman is married to the sister of Roberto Hernandez, the former owner and CEO of Banamex.

NEXT FOR BANAMEX

Chico Pardo and Manuel Romo, CEO of Banamex, said that Banamex is now looking to take back some of the market share it lost.

The unit holds around 6% of total loans in Mexico, compared to its peak of 18% in 2009 when it was operating as Citibanamex, Goldman Sachs analysts said.

Banamex plans to grow through expanding its online offerings and boosting its client service, executives said.

"There are plenty of areas where we still haven't made headway, in terms of financial services," Chico Pardo said.

While executives largely declined to speak about a potential IPO on Thursday, analysts estimated that the timeline could be mid- to late-2026 instead of at the beginning of the year as previously expected.

The deal with Chico Pardo raises equity similar to the first share sale in an IPO, Bank of America analyst Ebrahim Poonawala noted, as Citi had estimated it would sell 15% to 20% in the first transaction.