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Treasury & Capital Markets
How BDO Unibank is funding its growth objectives
The Philippines’ largest lender BDO Unibank is raising 60 billion pesos (US$1.21 billion) through a rights offering in a capital build up programme to fund its growth plans.
Chito Santiago 4 Jan 2017
The Philippines’ largest lender BDO Unibank is raising 60 billion pesos (US$1.21 billion) through a rights offering in a capital build up programme to fund its growth plans.
In a disclosure to the Philippine Stock Exchange (PSE) on January 3, the bank says it will sell 716.4 million common shares at 83.75 pesos each. The offer price represents a 23.4% discount to the 15-day volume weighted average price of BDO common shares.
Each eligible shareholder is entitled to subscribe to one common share for every 5.095 shares held as of record date of January 10 2017.
“The fresh capital will support the bank’s medium-term growth objectives amid the country’s favourable macro-economic prospects and provide a comfortable buffer over higher capital requirements with the forthcoming imposition of the domestic systemically important bank (DSIB) surcharge,” the bank says in the PSE disclosure.
The Bangko Sentral ng Pilipinas, the central bank, has adopted the framework for dealing with DSIB to address systemic risk and inter-connectedness under the Basel III reform agenda. The banks are classified depending on the extent of their systemic importance using pre-defined indicators for size, inter-connectedness, substitutability and market reliance as a financial market infrastructure, and complexity.
BDO has appointed Credit Suisse, UBS, and BDO Capital and Investment Corporation as joint global coordinators as well as joint bookrunners for the transaction along with Citi, Goldman Sachs, and HSBC. BDO Capital is also acting as issue manager and domestic underwriter.
SM Investment Corporation (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 to its proportionate share and is willing to underwrite any shares not taken up by minority shareholders,” the PSE disclosure adds.
This is the second billion dollar capital raising through rights offering undertaken by BDO in more than four years. In June 2012, it sold 895.2 million shares at 48.60 pesos apiece in a one-for-three rights offer. The offer price then represented a 24.9% discount to the 15-day volume weighted average price of BDO shares.In another fund raising in October 2016, BDO accessed the US dollar bond market for US$300 million. This was part of the bank’s liability management initiatives to tap longer-term funding sources to support US dollar-denominated projects and effectively refinancing outstanding bonds worth US$300 million maturing in February 2017. 
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