MEXICO CITY--Mexican bank Grupo Financiero Banorte SAB (GBOOY, GFNORTE.MX) is looking to sell around $2.5 billion in shares to fund recent acquisitions and could have money left over to pursue further deals in a country where foreign-owned banks including Citigroup Inc. (C) control more than two-thirds of deposits.

The offering, which is expected to price later Tuesday, will pay for two acquisitions from European firms in need of cash: Spain's Banco Bilbao Vizcaya Argentaria SA (BBVA, BBVA.MC) and Italy's Assicurazioni Generali SpA (G.MI). It's also likely to generate excess capital, leaving Banorte room to increase lending and possibly finance another purchase.

Just two decades ago, Banorte was a small regional bank. But over the past four years it has engorged on acquisitions to become Mexico's third-biggest lender, nearly doubling its loan portfolio to around $32 billion, while becoming the country's biggest pension fund manager.

That expansion has positioned Banorte as the biggest local alternative in a country that represented the bulk of BBVA's profit last year and more than 10% of Citigroup's.

Banorte Chairman Guillermo Ortiz, who led Mexico's central bank from 1998 to 2009, has in the past criticized the outsized role of foreign banks in Mexico, where the institutions are extremely profitable and yet cautious on lending.

In the aftermath of the global financial crisis, Banorte has proven to be more aggressive on lending growth than Mexico's top two banks. Last year Banorte grew its loan portfolio by 16%, compared with a 6% contraction at BBVA Bancomer and a 13% expansion at Citi unit Banamex.

The extraordinary market shares of BBVA Bancomer and Banamex, which together are behind around 40% of total commercial bank credit, help ensure rich rates for loans, said Ed Kuczma, an analyst who weighs in on investment decisions at the $350 million Van Eck Emerging Markets Fund in New York.

"The competition is pretty complacent in terms of making sure that pricing doesn't become more competitive and drive yields down," said Mr. Kuczma, describing the Mexican economy as a "cash cow" for foreign banks.

Private-sector financing as a percentage of gross domestic product in Mexico is around 26%, according to World Bank and Mexican government figures, well below international peers and the 50% average for Latin America.

"None of them lend--not the Mexicans and not the foreigners," said Dolores Padierna, a high-ranking senator with the leftist Party of the Democratic Revolution, decrying the tendency of Mexican banks to invest deposits in government bonds, which yield juicy returns with modest risk.

The Mexican government is pushing to boost lending and drive competition among banks, which could nudge rates lower and eventually crimp the financial sector's profits.

Meanwhile, the scarcity of financial-sector stocks in Mexico--both BBVA Bancomer and Banamex aren't publicly traded--contributed to outsized demand for the EUR3.18 billion ($4.15 billion) initial public offering in September of Grupo Financiero Santander Mexico SAB, a unit of Spain's Banco Santander SA (SAN, SAN.MC) and Mexico's fourth-biggest lender.

But Banorte faces a tougher environment for its deal, since the Mexican economy has shown signs of a slowdown this year and local stock valuations are at a premium to their developed market peers. The bank had previously hoped to raise around $3 billion for the float.

Geoffrey Pazzanese, who helps manage $780 million in assets at Federated Global Investment Management in New York, says concerns about economic growth and valuations led him to slash his Mexico exposure to zero as of June versus an overweight position last August.

Mr. Kuczma, from Van Eck Emerging Markets Fund, said he's studying entry to Banorte via the follow-on offering, but that he still has questions for management regarding the bank's future acquisition strategy.

Banorte has snapped up assets as firms based in recession-hit Europe attempt to raise cash. The bank paid $800 million earlier this year to cover its half of a purchase, along with Mexico's Social Security Institute, of BBVA's Mexican pension business. And in June, Banorte announced plans to take full control of its Mexican pension and insurance joint ventures with Italian partner Assicurazioni Generali for $857.5 million.

Banorte executives have said they are trying to pace themselves on acquisitions. "We need to grow with quality, not just for the sake of growing," Banorte Chief Executive Alejandro Valenzuela said in an April interview.

Write to Amy Guthrie at amy.guthrie@wsj.com

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