• BDO to invest P60-B rights proceeds in loan business

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    BDO Unibank Inc., the banking arm of the Sy-led SM Group, plans to beef up its loan operations over the next few years by investing the proceeds from its planned P60-billion stock rights offering in the business.

    In its final prospectus dated January 3, BDO said the P59.75-billion net proceeds after offer and listing related fees will be “temporarily placed in investments allowed under the Bangko Sentral ng Pilipinas (BSP) regulations including BSP overnight placements and term deposit facilities,” after which the funds “will be taken out of such investments when needed for eventual loan use and are expected to be fully utilized to finance loan growth within the next few years, as well as for other general corporate purposes.”

    BDO is set to offer 716.4 million common shares priced at P83.75 each through a stock rights offering which is expected to raise a total of P60 billion.

    The offer period will run from January 16 to 24, and the offer shares are set to be listed on the Philippine Stock Exchange on January 31.

    “The additional capital will support the bank’s medium-term growth objectives amid the country’s favorable macroeconomic prospects, and provide a comfortable buffer over higher capital requirements with the forthcoming imposition of the Domestically Systematically Important Bank (DSIB) surcharge,” BDO said in the prospectus.

    “The additional capital will also allow the bank to sustain its momentum and take advantage of the country’s growth opportunities,” the bank said.

    “Going forward, the bank hopes to further expand its presence in emerging growth areas particularly the consumer, provincial middle market and SMEs [small and medium enterprises]and the underserved segments, as well as in infrastructure-related lending or project finance in line with the government’s thrust to promote countryside development and ramp up infrastructure spending,” it added.

    BDO appointed Credit Suisse, UBS and BDO Capital as the joint global coordinators and bookrunners, with Citigroup, Goldman Sachs and HSBC as joint bookrunners. BDO Capital & Investment Corp. will serve as issue manager and domestic underwriter.

    SM Investments Corp. (SMIC), BDO’s controlling and majority shareholder, has expressed its full support for the bank’s expansion plans and the proposed rights offer. SMIC commits to subscribe about P25 billion of BDO’s stock rights offer — its proportionate share and any shares not taken up by minority shareholders.

    BDO is a bank with the largest network in the Philippines, with more than 1,100 operating branches and over 3,500 ATMs nationwide. The bank is under the SM Group’s umbrella conglomerate SMIC, which also has business interests in retail (SM Retail Inc.) and property (SM Prime Holdings Inc.).

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