BDO raising $250M in capital; IFC to subscribe to $100M

The International Finance Corp., the financing arm of the World Bank Group, will buy $150 million worth of newly issued shares of Banco de Oro Unibank, Inc. to support the Sy-owned bank’s lending to small and medium enterprises. With the investment, the IFC is expected to nominate a representative to the BDO board. Another $100 million worth of common shares will be offered to foreign institutional investors, the sale of which was launched on Monday, BDO said in a statement. UBS will act as sole bookrunner for the placement, which is expected to close on April 23. The IFC subscription is expected to close on April 27. The listed bank said the capital-raising activity would support its growth and strengthen its position in the local banking sector. "The new capital will be used to support the bank’s medium-term growth objectives and further reinforce its position in the Philippine banking industry," it said. Both the IFC and so-called top-up equity placement transactions were priced at P41.50 per share, a price based on the market and computed using average BDO share prices in the past 15 days, without a discount. Trading of BDO shares were halted on Monday as a result and will resume on Tuesday. BDO noted that as a result of the investments, its Tier 1 capital ratio is expected to rise by 1.6 percentage points to 10 percent and its total capital ratio by 1.6 points to 14 percent from the end of last year. The IFC will invest $22.5 million and the IFC Capitalization Fund will buy $127.5 million worth of BDO shares. This is the first IFC Capitalization Fund investment in Asia. The $3-billion IFC Capitalization Fund is a global equity and subordinated debt fund that supports banks considered vital to the financial system of an emerging market. "The IFC’s investment will support BDO’s stepped-up efforts to offer financing to small- and medium-sized enterprises that form the backbone of the Philippine economy, helping to bolster the economic recovery and job security," BDO quoted IFC Director for East Asia and the Pacific Karin Finkelston as saying. — N.P. Aquino, GMANews.TV