UnionBank to Raise P40 billion from Share offering For Citibank buyout

UnionBank Philippines is raising P40 billion from a share offering to assist the payment of its buyout of Citibank’s Philippine business. UnionBank is one of the country’s primary lenders and a leading player in the local digital banking scene, and it is currently raising funds via a stock rights offering. A stock rights offering is a type of share sale reserved for existing stockholders, normally sold at a discount to the prevailing market price to attract more buyers.

The deals prospectus showed about 800 million shares offered at P64.55-P73.78 per share or an average discount of 25%-35%.

In total, the offer is valued between P51.6 billion – and P59 billion. However, the bank has indicated that it wishes to cap the proceeds at P40 billion, meaning fewer shares will be offered once terms are finalized.

The offer shares are set to be priced by April 4. While the ex-rights date was scheduled for April 6, the actual offer period will run from April 25 to May 6.

According to UnionBank, the proceeds “will primarily be used to partially fund the bank’s acquisition of the consumer banking business of Citigroup Inc. in the Philippines.”

The buyout was initially announced last December and, if successful, it will rapidly grow the banks’ size against larger competitors.

The acquisition is expected to close in late 2022 and includes Citi’s domestic credit card, personal loans, wealth management, and retail deposit businesses on top of real estate, three full-service bank branches, and five wealth centers.

Additionally, UinionBank is one of the few companies awarded a license to operate a digital bank as it recently established UnionDigital Bank Inc.

Source: Inquirer