Pitching a new banking play to the local stock market, Bank of Commerce (BankCom) has priced its initial public offering (IPO) at P12 per share, which is lower than the book value of its shares, thus finalizing its offering size at P3.36 billion.
The IPO price represented an 18.6-percent discount to the postlisting book value of the San Miguel conglomerate’s banking arm. This also marked a 4-percent reduction from the earlier stated maximum price of P12.50 per share.
At this IPO price, BankCom, the 16th largest bank in the country, will have a market capitalization of about P16.8 billion upon listing on the Philippine Stock Exchange on March 31 under the ticker “BNCOM.”
The offering of P12 per share accounted for about 81 percent of BankCom’s post-IPO book value of P14.75 per share. Peer banks with return on equity of less than 10 percent are currently trading at about 110 percent of their book value.
BankCom’s book value based on audited financial statements as of end-September 2021 amounted to P17.36 billion or P15.46 per share. Taking into account dilution after the completion of the offer, BankCom’s post-IPO book value is estimated at P20.69 billion or P14.75 per share, based on its prospectus.
Upon completion of the offer and assuming full purchase by the San Miguel group of shares for its stabilization activities, 21.34 percent of BankCom’s issued and outstanding capital stock will be held by the public.
BankCom has a high common equity tier 1 capital ratio of 14.7 percent of risk assets and a total capital adequacy ratio of 20.9 percent of risk assets as of end-September last year.
Based on these numbers, it has no urgent need for fresh capital. However, the IPO is being conducted as part of its universal banking license application.
In its prospectus, BankCom said its strategic vision would be to “grow in the coming years to achieve economies of scale, improve efficiency, and be [on a par] with the country’s leading domestic banks.”
The bank views the universal banking license as a key catalyst of growth, especially in the long-run. With an upgraded license, the bank intends to immediately start building a franchise around the new products and services that such a license affords, including investment banking services and bancassurance, among others.
The bank’s return on equity as of September 2021 stood at 4.2 percent. Net income at end-September 2021 amounted to P625.72 million, up by 26 percent year-on-year, on the back of higher net interest income, fee-based earnings and extraordinary gains from foreclosure of assets. INQ