Ongpin group completes acquisition of PBCom

A group led by former Trade Minister Roberto V. Ongpin on Friday completed its acquisition of a 97-percent stake in Philippine Bank of Communications via special block transactions at the local stock exchange worth P4.7 billion.

Based on a memorandum posted by the Philippine Stock Exchange, Ongpin’s takeover was sealed through the purchase of 47.09 million common shares and 120 million preferred shares both at P27.88 per share.

The block of common shares was worth about P1.31 billion, while the separate block of preferred shares was worth P3.34 billion.

PBCom vice chair Eric Recto confirmed in a text message that this development represented the official transfer of control of the bank to Ongpin’s group from the former major shareholders—the Chung, Luy and Nubla families.

Ongpin-led ISM Communications Corp. had been selected by the shareholders to come in as the bank’s “third party” investor. This was in line with the commitment of feuding shareholders to the state-owned Philippine Deposit Insurance Corp., which backed the bank’s rehabilitation in 2004.

The entry of Ongpin’s group had been approved by the Bangko Sentral ng Pilipinas.

The transaction has also been exempted by the Securities and Exchange Commission from the mandatory tender offer. But as PBCom’s common shares are now trading at a higher price, having run up at the stock market ahead of the entry of a new strategic investor, any tender offer at the same block price of P27.88 per share is seen as a useless exercise.

PBCom’s common shares fell by 5.7 percent to P80 per share yesterday. Its preferred shares are listed but not actively traded at the local stock exchange. Its preferred shares last changed hands at the local bourse in 2007 at P25 per share.

With the conclusion of this transaction, ISM, which recently sold a substantial stake in Express Telecommunications Philippines Inc., has acquired through PBCom a banking franchise with a 64-branch network and a niche middle-market Chinese clientele base.

PBCom is the 22nd largest commercial bank in the country, with assets of about P43.8 billion as of the end of 2010.

Ongpin, the local partner of British fund Ashmore which has been investing heavily in the Philippines in the last few years, is also part of the group that holds the controlling stake in conglomerate San Miguel Corp. His group also has interests in real estate development (Alphaland Corp.), mining (Atok Big Wedge Co. Inc.), information technology and gaming (Philweb Corp.) and oil refinery (Petron Corp.).

The BSP recently approved the staggered liberalization of branch restrictions within Metro Manila in the next three years. This means that for existing banking players, it has become less compelling to make an acquisition for the sole purpose of expanding branches. But for a new entrant like Ongpin, PBCom’s existing banking franchise was a ticket to diversify into the banking business.