East West Bank IPO priced at P18.50 a share

Gotianun-led East West Bank has priced its initial public offering at P18.50 per share, at the low end of the original price range.

This price will bring the base IPO size to P4.54 billion, which can be upsized to P5.22 billion if the over-allotment option were exercised.

An industry source involved in the equity deal said the price was about 1.12 times the bank’s expected book value this year which, stock dealers said, offered a discount to the levels at which other listed local banks were trading, currently at 1.7 times book value.

The offering will bring to public hands the ownership of about a quarter of the company and raise fresh funds for expansion in line with aspirations to become one of the country’s major banks.

At this level, the offering is a “buy,” said PNB Securities deputy chief Manny Lisbona. “The low interest environment is perfect for its target market segment, (which is) consumer finance.”

Joseph Roxas, president of Eagle Equities Inc., said the offering price was “acceptable.” “It was priced to sell,” Roxas said.

Among listed banks, Roxas noted that Bank of the Philippine Islands was still the most expensive at 2 times book value (P/B) while other major banks were trading at less than 2x (P/B). He said the cheapest ones—Union Bank and Rizal Commercial Bank Corp.—were currently trading at less than 1.5x (P/B). As such, he said East West’s offering was discounted.

East West Bank chairman Jonathan Gotianun had said the stock debut also meant the bank was “prepared to subject itself to higher standards of corporate governance.” Listing, Gotianun said, would also give East West a “new currency” to fund potential merger and acquisitions.—Doris C. Dumlao