BPI gets long-term lifeline from rights offer

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The P25-billion proceeds from the stock rights offer of the Bank of the Philippine Islands (BPI) will keep the bank afloat for up to five years, a top company official said.

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Earlier this month, BPI raised as much as P25 billion through a stock rights offering, capping the largest capital market transaction the listed bank has done in its history.

After the listing ceremony of BPI’s stock rights offer in the Philippine Stock Exchange on Monday, BPI President and Chief Executive Officer Cezar Consing said in an interview with reporters that the proceeds from the transaction will keep the company’s expansion plans fully funded for the next few years.

“These funds will give us room to grow in so many years. Like three, four, five years because what also happens is, if these funds are spent wisely, which we expect them to be spent wisely, we’ll generate more income and that income gets flowed back into the capital base of the bank, which will allow us to do more,” he said.

“Hopefully, it creates a virtuous cycle. This should be good for a while,” he added, specifying that BPI won’t do any fund raising in the near term other than the rights offer.

BPI issued 370 million common shares at P67.50 a share. The shares issued were at ratio of 1:9.602 common shares held, or 10.4 percent of outstanding shares.

“This is the biggest transaction of the bank. Overnight, we increased the capital base of the bank by about 30 percent. That allows us to become a much better bank to our clients,” Consing said.

According to him, the bank will use the proceeds from the offer to boost the company’s wholesale and retail loan book, as well as to improve its global markets business.

“At the same time, we will build our IT [information technology], we will hire more people, and we will build out more physical space,” the company’s chief executive further said.

Strong support
Considered as the largest capital markets transaction in the bank’s history, the rights offer received strong support from BPI shareholders, both domestic and foreign, with 99-percent take-up and over P33.5 billion of subscriptions.

The bank’s major shareholders, Ayala Corp. and Ayala DBS Holdings Inc., a company held by Ayala Corp. and Government of Singapore Investment Corp., also subscribed to the rights offer.

Completion of the transaction will increase BPI’s Tier 1 capital adequacy ratio from 14.7 percent to 18.6 percent on a pro-forma basis, based on the bank’s latest disclosed financials on September 30, 2013.

BPI Capital Corp. is the sole global coordinator, domestic bookrunner and domestic underwriter for the rights offer. Goldman Sachs and J.P. Morgan are the joint international bookrunners and underwriters.

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