The sale was completed early last Friday through an accelerated bookbuilding û the first time ever a Filipino company has raised primary capital from an overnight sale. The transaction took some waivers from the regulators, but with the first such deal now done, the door could be open for other companies to raise additional money in the international markets without having to go through an entire roadshow.
The fixed-price deal, which made up 95% of the total fundraising exercise, comprised 164.9 million new shares which were sold at Ps38 each, according to a source close to the offer. The price represented a discount of 7.3% to the closing price on October 10 or 6.9% to the volume weighted average price on the same day. Trading was suspended from October 11 and will resume on October 26 after the domestic portion too has been completed.
Including the domestic sale, which will start today, the countryÆs largest lender will sell 173.6 million shares, or 9.6% of the company, for a total deal size of Ps6.6 billion ($132 million).
UBS was the sole bookrunner for the international portion, while First Metro Investment will be leading the five-day domestic offer.
The transaction was initially planned for May, but was delayed because of the global equity market correction which hit the Philippines quite hard. Once back in the market though, investors were keen to buy into the bank, which has been lagging its sector peers over the past year.
ôOn a valuation basis Metrobank looks quite attractive at 1.3 times its 2007 book value,ö argues one observer, who notes that other banks in the Philippines trade at about 1.8 to 2 times. ôIt is also a play on the Philippine economy and if you believe that is going to do well, then Metrobank as the largest lender in terms of both assets and loans is a good leveraged buy.ö
According to the source, the international offer attracted $500 million worth of orders, making it four times covered, during the 18 hours of bookbuilding. About 60 investors participated with approximately 60% of the deal going to US investors and the rest split fairly evenly between Europe and Asia.
MetrobankÆs share price fell 2.4% to Ps41 on its last day of trading before the suspension, which left it 28% up year-to-date. It is still trading well below this yearÆs high of Ps48 which it reached on May 8, just before the equity market started to correct. It is currently on a rebound from the June low of Ps29.
The bank has a multitude of reasons for raising cash, including the need to write off a certain amount of non-performing loans. According to the share sale document, the money will help strengthen the its capital adequacy ratio ahead of the Basel II requirements that come into effect in July next year, and will also go towards general corporate purposes, such as working capital and investments, the refinancing of existing subordinated debt maturing in 2007, and potential industry consolidation and acquisition opportunities.
In September, Fitch Ratings estimated that ôadditional charges will be required going forward û possibly amounting to as much as 5% of assetsö to cover the impaired assets still on its books at the end of 2005.
ôBut with reasonably strong earnings likely to continue, this should be manageable over time such that there is no impairment of the bankÆs capitalisation,ö the ratings agency said in a note upgrading MetrobankÆs individual rating. The rating was raised to D from D/E in recognition of its improving core earnings in the past two years and the use of those to strengthen its capitalisation and overall balance sheet.
In February this year, Metrobank, which is controlled by the Ty Family, raised $125 million worth of Tier 1 capital through the first ever hybrid debt offering by a Philippine company (also led by UBS), which brought its Tier 1 capital adequacy ratio to 12.2% as of June 30. Its total CAR stood at 18.1% on the same date.
In the first half of this year posted a net profit of Ps2.98 billion ($56.1 million), which was up slightly from Ps2.81 billion in the year earlier period and compared with Ps4.28 billion in 2005 as a whole.
It has total consolidated assets of Ps593.3 billion ($11.9 billion) and 707 branches, of which 557 were operated by Metrobank and the remainder by 76%-owned Philippine Savings Bank.
¬ Haymarket Media Limited. All rights reserved.
