Spain's Finance Ministry has picked four investment banks to coordinate the blockbuster privatization of Spain's lottery company, Sociedad Estatal de Loterías y Apuestas del Estado SA, people familiar with the situation said.

J.P. Morgan Chase Inc. and Goldman Sachs Group Inc., along with UBS AG and Credit Suisse Group will be in charge of selling between €6.5 billion ($9.44 billion) and €7.5 billion worth of shares in Loterías later this year, in an initial public offering that is set to become the biggest on record in Spain and one of the largest privatizations in Europe in the last decade, these people said.

An official announcement on the mandates could come as early as Monday, said the people familiar with the matter. Loterías is also expected to name two or three Spanish banks that will take part in the deal. A Loterías spokesman couldn't be reached for comment.

The sale of a 30% stake in Loterías is a key component of Spain's plan to lower its debt load, which has risen sharply doing the three-year economic slump. Besides the lottery firm, Spain will privatize its two largest airports.

In a first step, Loterías in May hired Rothschild as financial adviser in the transaction. The plan is to list the company by the first week of November.

Thanks to privatizations and a shake-up of the country's savings banks sector, IPO activity is set to make a big comeback this year in Spain. Bankia and Banca Civica, two lenders that resulted from the tie up last year of several savings banks, last week kicked off their IPO processes.

Market conditions remain difficult though, and the only company that so far tried, Telefónica SA unit Atento, canceled its share sale last month at the last minute due to lack of demand.

But while the listings of the savings banks are considered tough sells, bankers say Loterías is likely to draw interest from a wide range of investors, both retail and institutional. The company has no debt, and with limited capital expenditures generates a lot of excess cash, allowing it to pay out one of the richest dividend payouts among listed companies in Europe.

The four investment banks beat out rivals including Morgan Stanley, Citigroup Inc. and Bank of America Merrill Lynch for the hotly contested mandate, which is likely to be the most lucrative this year in Spain in terms of fees. For J.P. Morgan and UBS, in particular, it's a win, because the two banks are already among four banks to coordinate Bankia's listing, which involves raising between €4 billion and €4.5 billion. Credit Suisse has also been active this year, and is advising Banca Civica on its IPO.

Loterías, which has a near monopoly on the lottery business in Spain, last year had revenue of about €10 billion, and €3 billion in earnings before interest, taxes, amortization and depreciation. That's a third of all of what is spent on gambling in the country. Chairman Aurelio Martínez has said that the company could command a market value of roughly €25 billion, rivaling Las Vegas Sands as the biggest gaming company in the world by market value.

The company says that around Christmas, 70% of Spaniards take part in the extraordinary lotteries the company organizes.

Every Dec. 22, Spaniards gather around television screens to watch the winning numbers of this lottery announced, or "sung," by kids from the San Ildefonso Catholic school in Madrid. The winning number is called the Gordo, or the "fat one." The ritual is repeated on Jan. 6, but there the first prize is called the Niño, or "the boy."

PriceWaterhouseCoopers is working as a strategic adviser to Loterías, and Clifford Chance and Uría Menéndez are legal advisers.

The Wall Street Journal