First bank in 8 years: East West prepares for IPO

Gotianun-led East West Banking Corp. plans to debut on the Philippine Stock Exchange and sell as much as P6.63 billion worth of shares to the public this year, potentially marking the first initial public offering by a local bank in eight years.

In a prospectus filed at the Securities and Exchange Commission, the medium-sized bank has applied to sell to the public around 245.32 million common shares at a maximum price of P23.50 per share, translating to P5.76 billion in total proceeds.

But based on the prospectus, there will also be up to 36.8 million “optional” shares worth P864.8 million that the principal shareholders can sell in case of strong demand for the issue.

This “overallotment” option can raise the total equity deal to P6.63 billion and can be exercised within 30 days from listing date.

This equity exercise will leave in public hands about 20-25 percent of EWBC’s outstanding stocks after the IPO.

The prospectus dated January 20 showed that the offering will be a mix of primary (141.06 million) and secondary (104.26 million) shares to be issued by its parent conglomerate, Filinvest Development Corp., excluding the overallotment option.

EWBC can thus raise up to P3.3 billion from the primary offering while FDC’s gross proceeds will amount from P2.45 billion, which can be increased further to P3.3 billion if the overallotment option were exercised.

The bank has mandated Deutsche Bank and JP Morgan as joint bookrunners and international lead managers while Unicapital Inc. was named as the domestic lead underwriter.

Up to 171.72 million, or 70 percent of the shares, will be offered and sold overseas, but outside the United States. The remainder will be sold locally.

“EWBC intends to use the net proceeds from the primary offer for the payment of bank branch licenses, the expansion of the branch network and implementation of IT [information technology] projects and for general corporate purposes,” the prospectus said.