Rizal Commercial Banking Corp. (RCBC) announced yesterday that Cathay Life Insurance Co., Ltd., a wholly owned subsidiary of Cathay Financial Holding Co., Ltd. Will buy a 20 percent stake in the bank.
It will buy 124. million new subscribed shares plus 119 million shares sold by Hexagon Investments B.V., an entity controlled by funds advised by CVC Asia Pacific Limited (CVC), and 36.7 million existing shares being sold by International Finance Corporation (lFC).
The strategic investment by Cathay Life, which raises P7.95 billion (approximately USD 179 million) of new Core Equity Tier 1 (CET1) capital for RCBC, is part of RCBC’s current capital raising strategy in order to comply with the more stringent capital adequacy rules under the new Basel III framework and is expected to enable RCBC to be comfortably above the minimum CET1 requirements of the BSP.
The proceeds from the investment will continue to support the continued growth of RCBC’s loan book and increased expansion into the SME and Consumer segment to improve margins and risk diversification/actuarialization. The transaction is also in-line with Cathay’s strategy to expand its business in Asean, according to Lorenzo Tan President and chief executive of RCBC.
The introduction of Cathay as a strategic partner with Pan Malayan Management and Investment Corp (PMMIC) and RCBC marks a landmark milestone in the history of RCBC and the new strategic partnership positions both RCBC and Cathay well for future growth opportunities.
The key terms of the transaction involves Cathay Life acquiring 280,000,000 common shares Php17.92 billion (approximately USD402 million) through: (1) Subscribing to 124,242,272 primary common shares of RCBC at Php 64.00 per share to raise new CET1 capital for the bank of PHP 7.95 billion (approximately USD 179 million); and (2) Acquiring from CVC 119,033,590 existing shares also at Php 64.00 per share, or Php 7.62 billion (approximately USD 171 million); and (3) Acquiring from the IFC 36,724,138 existing shares also at Php 64.00 per share, or Php 2.35 billion (approximately USD 53 million) all are pursuant to Sale and Purchase Agreement.