BDO completes biggest ECM deal in the Philippines
Wednesday, July 4, 2012
Source: The Asset By Chito Santiago
The Philippines’ biggest lender in terms of assets, BDO Unibank, has completed a landmark rights offering that raised more than US$1 billion, representing the largest ever equity capital markets (ECM) transaction by a Philippine issuer.
The bank, in a one-for-three rights offer, issued a total of 895.22 million rights shares at 48.60 pesos (US$1.15) each, raising gross proceeds of 43.50 billion pesos. These brought BDO’s total issued and outstanding shares to over 3.58 billion shares. BDO says the offer price was based on the 15-day volume-weighted average price of its common shares listed at the Philippine Stock Exchange (PSE) at a discount of 24.9%. The offer period ended on June 27.
In a disclosure to the PSE on July 2, the bank says the rights shares were fully subscribed with the shareholders applying for shares beyond their entitlement. “The offer saw strong participation from the bank’s domestic and international investors despite challenging global market conditions,” it adds. BDO’s strategic investors include SM Investments Corporation, International Finance Corporation and United Overseas Bank (UOB).
The fully underwritten fund raising boosted the bank’s tier 1 capital from 10% to 15%, and its overall capital adequacy ratio from 15% to 20% - providing a comfortable buffer to the Basel III capital requirements that will be implemented by the country’s central bank, Bangko Sentral ng Pilipinas. “BDO believes the offer has better positioned it to fulfill its medium-term growth objectives and take advantage of the positive outlook on the Philippine economy,” the bank says in a statement.
Citi, Deutsche Bank and J.P. Morgan were the joint international lead managers and underwriters for the transaction, while UOB was the international co-lead manager and co-lead underwriter. BDO Capital and Investment Corporation was the issue manager and domestic underwriter.
In an earlier fund raising to support its business expansion plans and re-lending activities, BDO tapped the international bond market in February this year for US$300 million. The five-year deal attracted a total demand of US$460 million.
In 2011, the bank posted an audited net income of 10.5 billion pesos, which was in line with its earnings guidance and represented a 19% growth over the 8.8 billion pesos net profit posted in 2010. It expanded its loan portfolio by 24% to 670.1 billion pesos in 2011 by focussing on creditworthy borrowers in fast-growing industry sectors.