Ayala conglomerate to buy half of DBS stake in BPI

MANILA, Philippines—The Ayala conglomerate has agreed to buy about 10.4 percentage or about half of the stake held by Development Bank of Singapore in local banking crown jewel Bank of the Philippine Islands for P25.6 billion in cash.

Following the acquisition, Ayala’s effective ownership in BPI will increase to 44 percent from 33.6 percent while DBS will pare down its stake from 20.3 percent to 9.9 percent.

The transaction is in line with DBS’ “disciplined capital management” and meant to strengthen its capital position ahead of the introduction of Basel III on January 1, 2013, DBS said in a statement in Singapore.

“DBS has been a strategic investor in BPI for over a decade and it remains an attractive investment. We are pleased that the transaction will allow us to continue being a meaningful shareholder in a capital-efficient manner,” DBS chief executive officer Piyush Gupta said.

For his part, Ayala chair and chief executive officer Jaime Augusto Zobel de Ayala said: “DBS has been and will continue to be a valuable strategic partner in the governance and management of BPI. They have been a significant part of many of the bank’s milestones and achievements for over a decade. We look forward to continuing this partnership with them in succeeding years.”

DBS, which has been a strategic investor in BPI since 1999, will remain represented on the BPI board.

Ayala president and chief operating officer Fernando Zobel de Ayala said: “We believe this is a value and earnings accretive acquisition for Ayala given our view on the growth trajectory of the bank over the medium term. This reflects our confidence in the growth potential of BPI particularly amidst the projected expansion of the Philippine economy over the next few years. As a holding company we always look for ways to strengthen our portfolio and take advantage of opportunities that will enhance the value of our holdings while also continuing to ensure the stability of the shareholder base in each of our business units.”

DBS said the transaction was priced at 2.7 times the latest consolidated book value of BPI of P25.60 per share as of end-June and a discount of about 9.8 percent to the three- month volume-weighted average price per BPI share.

Ayala’s chief finance officer Delfin Gonzalez said: “Our current financial position and our low gearing level provide more than adequate room for us to invest in new growth areas while also optimizing the value of our existing portfolio.”

As of the end of the first semester of 2012 Ayala had over P23 billion in cash.