UnionBank completes P12-B stock rights offer

Union Bank of the Philippines (UBP) raised P12 billion from a stock rights offering in January, arming it with fresh funds to rapidly expand its lending portfolio and bankroll its startup digital bank.

It was the latest fundraising deal for the Aboitiz-led bank, which is undertaking aggressive expansion moves, including last year’s P72-billion acquisition of Citi Philippines’ consumer business.

“In compliance with the requirements of Securities and Exchange Commission per its confirmation of exempt transaction dated December 13, 2022, we are pleased to inform the public of the successful completion of the stock rights offering of Union Bank of the Philippines,” the lender said in a stock exchange filing on Friday.

The transaction involved the sale of 210.97 million shares to existing stockholders at a price of P56.88 each.

The shares will be listed on the Philippine Stock Exchange on Feb. 6., UnionBank said in the filing.

UnionBank expected 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.

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

“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.

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

This was the banking giant’s second rights offer in less than a year after raising P40 billion in May 2022 to finance the acquisition of Citi Philippines. Those shares were priced at P64.81 each.

Meanwhile, the Citi acquisition helped boost earnings in 2022 as UnionBank’s net income rose 0.7 percent to P12.67 billion while net revenues jumped 16 percent to P52.2 billion.

The lender said earnings were bolstered by net interest income and fee-based income, offsetting the drop in trading gains. Fees and other income doubled to P13.4 billion, the lender said.