Aboitiz group’s UnionBank to launch P40-B share offer | Inquirer Business

Aboitiz group’s UnionBank to launch P40-B share offer

/ 05:40 AM April 01, 2022

The billionaire Aboitiz family’s Union Bank of the Philippines (UnionBank) is raising P40 billion from a share offering this month to help pay for its massive buyout of American banking giant Citi’s Philippine business.

UnionBank, one of the country’s biggest lenders and a leading player in the local digital banking space, is raising funds through a stock rights offering, a type of share sale reserved for existing stockholders.

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Rights offering shares are usually sold at a discount to the prevailing market price to make them more attractive to buyers.

The deal prospectus showed as much as 800 million shares would be offered at a price range of P64.55 per share to P73.78 per share or an average discount of 25-35 percent.

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The entire offer was valued at P51.6 billion to P59 billion, however, UnionBank indicated in the prospectus it wanted to cap the proceeds at P40 billion, meaning a smaller number of shares would likely be offered once the terms are finalized.

The offer shares will be priced on April 4 this year while the ex-rights date was set on April 6. The actual offer period runs from April 25 until May 6 while the shares will be listed on May 16 this year.

UnionBank, valued at about P148 billion in the stock market, said in the prospectus that proceeds “will primarily be used to partially fund the bank’s acquisition of the consumer banking business of Citigroup Inc. in the Philippines.”

Announced last December, the P55-billion buyout would help UnionBank rapidly grow in size against larger competitors.

The acquisition, which is expected to close in the latter part of 2022, includes Citi’s domestic credit card, personal loans, wealth management, and retail deposit businesses on top of real estate, three full-service bank branches and five wealth centers.

UnionBank is also one of a few companies awarded a license to operate a digital bank. It recently established UnionDigital Bank Inc., which is targeting to start operations in the second semester of 2022.

The rights offering comes after Davao-based tycoon Dennis Uy’s DITO CME Holdings aborted its P8-billion rights offer last January amid weak demand, angering the Philippine Stock Exchange and minority investors.

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To boost investor protection safeguards, UnionBank’s prospectus featured more stringent deal withdrawal provisions in the wake of DITO CME’s share sale debacle.

The new provisions include stricter “force majeure” reasons such as the suspension of trading, significant banking disruptions and economic, political or natural calamities.

Moreover, the offer could not be withdrawn or suspended if the company or its underwriters fail to sell shares or refuse to comply with commitments and obligations to buy unsold shares after the ex-rights date, the prospectus noted.

CLSA Exchange Capital Inc. and ING Bank N.V Manila branch would act as joint global coordinators and domestic underwriters.

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TAGS: aboitiz, digital banking, Union Bank of the Philippines (UnionBank)
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