UnionBank prices P12-B rights offer at 35% discount

SALE UnionBank says a big chunk of proceeds will be used to expand loan portfolio. —CONTRIBUTED PHOTO

Aboitiz-led Union Bank of the Philippines (UnionBank) is rolling out a P12-billion stock rights offering in the middle of January as it sells shares at a discount to finance lending and the expansion of its startup digital banking subsidiary.

UnionBank priced the offer shares late Wednesday at P56.88 each, which was 35 percent lower than its closing price that day.

The bank’s stockholders will be allowed to acquire one rights share for every 10.15 shares held.

UnionBank set the ex-rights date on Jan. 9 while the offer period will run from Jan. 16 to Jan. 27, 2023.

Listing of the 210.97 million rights shares was tentatively set on Feb. 6 this year.

UnionBank expects to raise net proceeds of P11.88 billion, which will be fully deployed by the first half of 2023, the offer prospectus showed.

It said 59 percent (P7 billion) of the proceeds will be used to expand its loan portfolio while 25 percent (P3 billion) will be infused into digital banking unit UnionDigital Bank, which started operations in July last year.

“UnionDigital is an essential part of the bank’s growth aspirations to accelerate the penetration of the larger untapped and underserved retail segments in the Philippines,” the lender said in the prospectus.

“UnionDigital will become the bank’s principal digital instrument to reach a larger untapped retail segment frictionless and efficiently, differentiating itself from traditional banks who rely greatly on brick-and-mortar infrastructure,” it added.

There are six digital banks in the country, including PLDT Inc.-backed Maya and Gokongwei-backed GoTyme.

Meanwhile, CLSA Exchange Capital Inc. and Unicapital Inc. were hired as joint global coordinators and joint domestic underwriters for the rights offer while Citigroup Global Markets Ltd. and UBS AG Singapore Branch were tapped as overseas capital market advisers.

UnionBank was earlier planning to raise up to P20 billion before downsizing the rights offer to P12 billion, noting that additional funding requirements can be financed using internal cash.

Last May, UnionBank raised P40 billion from a stock rights offer to bankroll the acquisition of Citi Philippines’ consumer business. The offer shares at the time were priced at P64.81 each.

It also sold P11 billion in bonds last June and signed a $358 million (P20 billion) syndicated loan deal last November.

UnionBank is part of Aboitiz Equity Ventures, the Aboitiz clan’s flagship conglomerate whose interest span power, finance, food, property and infrastructure.

The bank’s net income from January to September dropped 5.6 percent to P10.1 billion but was up 67 percent to P4 billion in the third quarter alone after the lender completed the P72 billion Citi takeover.

Excluding trading income, net revenues during the nine-month period jumped 37 percent to P36 billion while provisions for debt losses fell 43 percent to P2.3 billion.