City Savings to take over PETNET

City Savings chair Eugene Acevedo

Conglomerate Aboitiz Equity Ventures (AEV) has agreed to sell a 51-percent stake in cash remittance and payments firm PETNET Inc. to thrift bank arm City Savings Bank and Union Properties Inc. for cash consideration of around P1.2 billion, consolidating the group’s financial services business.

“This is in line with our financial inclusion strategy. Having more counters around the country will enable us to reach more unbanked and underbanked Filipinos,” CitySavings Bank chair and UnionBank senior executive vice president Eugene Acevedo said in a text message on Monday, when asked about the rationale for the transaction.

Acevedo added this was what Union Bank president and chief executive officer Edwin Bautista was referring to as “inclusive prosperity.”

This will consolidate AEV’s interests in banking and financial services under Union Bank, which is 48.83-percent owned by AEV. Union Bank, in turn, owns 99.77 percent of CitySavings and 100 percent of Union Properties.

The consolidation is seen to “unlock shareholder value from the synergies between the core businesses of CitySavings and PETNET.”

PETNET is a leading transaction center with over 2,500 locations nationwide, providing its customers with a comprehensive scope of reliable financial services under Western Union International and Domestic Remittance, money changing, bills payment, e-loading, Department of Education loans, Government Service Insurance System pension loan acceptance and micro-insurance in one location.

A share purchase agreement has been signed involving 2.46 million shares valued at P487.54 each, AEV said in a disclosure to the Philippine Stock Exchange on Monday.

“The value of the transaction is based on the parties’ agreed enterprise value for PETNET and its assets, net of the amount attributable to the other shareholders of PETNET,” the disclosure said.

The deal is still subject to approvals by the Philippine Competition Commission (PCC) and the Bangko Sentral ng Pilipinas (BSP).

AEV acquired 51 percent of PETNET in mid-2015 for about P1 billion, citing opportunities from the remittances of overseas Filipino workers and the distribution of complementary products through an extensive network of outlets.

Facing competition from other remittance companies in terms of number of branches, novel products and services, aggressive marketing promotions and advertising, and pricing schemes, PETNET has since then embarked on a rapid expansion program and undertaken a brand re-boot with its new retail brand “pera HUB”. It has since then launched digital initiatives to more effectively market its product and service offerings.