Ayala-led Bank of the Philippine Islands (BPI) has firmed up its P50-billion stock rights offering at a price of P89.50 apiece, allowing existing shareholders to gobble up more shares at cheaper-than-market valuation.
Southeast Asia’s oldest bank is set to offer 558.66 million new common shares to existing shareholders. The entitlement ratio was set at one rights share for every 7.0594 shares held, BPI disclosed to the Philippine Stock Exchange (PSE) on Monday.
As the offer price marked a discount from BPI’s last closing price of P117 per share before the long Lenten break, share prices declined by 1.71 percent to close at P115 per share on Monday, giving BPI a market capitalization of P461.41 billion. It hit as low as P109.80 per share in intraday trade.
Reginaldo Cariaso, cohead of investment banking and chief operating officer at BPI Capital, said BPI’s pricing was based on a 21.6-percent discount to the 15-day volume-weighted average price. BPI Capital is the sole global coordinator and lead manager, sole domestic manager, domestic bookrunner and underwriter for the offering.
In a text message yesterday, Cariaso said the pricing was “in line with recent relevant precedent stock rights offerings in the Philippines and banks in the region and it takes under consideration current market conditions.”
“BPI’s shareholders and investors are supportive of BPI’s strategic initiatives and the rights issue,” he added.
The rights offering will start on April 16 and end on April 25. Listing on the PSE is tentatively scheduled for May 4.
Shareholders as of April 6 will be eligible to subscribe.
According to BPI, proceeds from the offering will be used to “enhance its capital position to further expand its presence in emerging growth areas particularly funding loan growth in the consumer, SMEs (small and medium enterprises) and microfinance segments, while achieving a buffer over higher loss absorbency requirements under Basel 3 rules as well as funding infrastructure expansion.”
Basel 3 introduces a complex package of reforms designed to improve the ability of bank capital to absorb losses. It also extends the coverage of financial risks and puts in place stronger firewalls against periods of stress.
The bank also plans to invest further in distribution channels, seeking to improve both efficiency and client coverage via digitization and electronic channels and bank branches. Southeast Asia’s oldest bank also said it would be ready to consider “inorganic growth opportunities if and when they arise.”
The joint international bookrunners and underwriters are Deutsche Bank AG (Hong Kong Branch), Goldman Sachs (Singapore) Pte. and J.P. Morgan Securities plc.
Ayala Corp., BPI’s parent conglomerate, has committed to support the rights offer.