The banking arm of the Aboitiz Family’s group of companies, UnionBank [UBP 86.1 0.3%] [link], said that it has updated its planned stock-rights offering (SRO) to target a raise of P12 billion.
UBP initially said that it would raise up to P20 billion to help grow its digital banking business and retail banking business, but it recently said that any capital required beyond the P12 billion to be raised “can be internally generated from existing businesses”.
UBP is planning to sell up to 220,263,518 common shares, at between P54.48 and P58.38 per share, with an offer period that will run from January 16 to January 27.
UBP plans to set the final price for the SRO tomorrow.
MB BOTTOM-LINE
As a UBP shareholder, I’d be happy to see UBP trimming the SRO offering if the bank’s financials show a good chance of being able to finance a huge portion of that initial need using internally-generated money.
I don’t like it when companies raise more money than they need, because a company’s own internally-generated capital is always the cheapest to spend.
It makes sense that UBP’s management may have wanted to leave a little wiggle room when it first made the announcement.
Maybe the amazing size and cost of that recent Citigroup acquisition was weighing on their minds.
But perhaps their own financials started to look a little better once some of the dust settled from that huge purchase, so they felt comfortable enough to chop the SRO by 40%?
From the outside looking in, it doesn’t sound like they’ve clipped the scope of the plans they have, only the amount of the company they’re willing to sell to execute those plans.
That feels like a signal of strength.
--