UnionBank stock rights offer priced at P64.81/share

MANILA, Philippines — Aboitiz-led Union Bank of the Philippines aims to raise P39.84 billion, pricing its stock rights offering, scheduled to kick off by the end of the month, at P64.81 per share.

The price was determined based on the 15-day volume-weighted average price of the bank’s common shares traded on the Philippine Stock Exchange (PSE), subject to a discount of 30 percent.

It was at the lower end of the price range of between P64.55 and P73.78 per share.

As part of the fund raising activity, eligible shareholders are entitled to one right share for every 2.4707 shares owned during the offer period from April 25 to May 6.

The tentative listing date is on May 16.

Existing shareholders led by Aboitiz Equity Ventures (AEC), the Insular Life Assurance Co. Inc., and pension fund manager Social Security System (SSS) committed to fully subscribe to their respective allocations, as well as to any shares not taken up by other shareholders.

The listed bank has tapped CLSA Exchange Capital Inc. and ING Bank NV Manila Branch as the joint global coordinators and joint domestic underwriters for the fund raising activity.

The Aboitiz-led bank aims to raise P39.84 billion to partially fund the acquisition of the retail banking business of global banking giant Citigroup Inc. in the Philippines.

Last December, UnionBank said it was shelling out around P55 billion for the so-called “deal of the year” involving the acquisition of Citi’s retail banking business in the Philippines.

UnionBank president and CEO Edwin Bautista earlier told The STAR the net asset value of Citi’s retail banking business is about P9.7 billion while the premium is about P45.3 billion.

For its part, Citi said UnionBank would pay a cash consideration for the net assets of the acquired businesses plus a premium of P45.3 billion, subject to customary closing adjustments.

Upon closing, Citi expects the transaction to result in the release of approximately $300 million of allocated tangible common equity, as well as an increase to tangible common equity of approximately $500 million.

Aside from Citi’s credit card, personal loans, wealth management, and retail deposit businesses, the acquisition also includes Citi’s real estate interests in relation to Citibank Square in Eastwood, three full service bank branches, five wealth centers, and two bank branch lite units.

The closing of the Citi acquisition is conditional upon satisfaction or waiver of conditions precedent customary for similar transactions, including the approval of the Philippine Competition Commission, approval of the Bangko Sentral ng Pilipinas, prior written consent of the Philippine Deposit Insurance Corp., approval of the Insurance Commission, and approval of the Securities and Exchange Commission.

UnionBank expects to complete the acquisition in the second half after regulatory approvals have been obtained.

The Aboitiz-owned lender expects the Citi acquisition to increase its consumer loan portfolio, result in higher net interest margins and overall profitability in the long run.