In May, FinanceAsia named the winners of its annual Country Awards for Achievement. Last month, winners were given ther awards at our annual awards dinner in Hong Kong. Today, we continue presenting the rationale for our decisions with a look at the Philippines.
Best Bank, Best Private Bank: BDO Unibank
Our best bank in the Philippines this year is BDO Unibank, which delivered record 2016 earnings on the back of strong results from its core businesses. The bank likewise laid the groundwork for future growth through key initiatives, including a successful capital raising and the sale of a 40% stake in One Network Bank (ONB) to private equity firm TPG.
BDO continued its branch build-out to broaden customer reach in underserved areas (about 69% of the Philippines’s population has no access to banking services). The bank’s network now includes more than 1,100 branches and over 3,600 ATMs. Most of its branch openings were in areas outside Metro-Manila as it targeted fast-growing secondary and tertiary cities. BDO particularly focused on enlarging its footprint in the southern Philippines following the completion of its acquisition of Davao-headquartered ONB in 2015. In 2016, BDO opened 15 new ONB branches, of which 11 were located in key cities of Luzon and Visayas regions, and the rest in Mindanao.
BDO delivered a 15% rise to P57.0 billion ($1.14 billion) in net interest income on a 16% expansion in loan portfolio to P1.5 trillion, combined with the 15% increase in total deposits to P1.9 trillion. This was supplemented by the 15% jump to P22.2 billion in fee-based income and insurance premiums amounting to P8 billion (following the consolidation of BDO Life), which compensated for declines in trading and foreign exchange gains.
In January 2017, the bank completed its rights offer, which raised a total of P60 billion in fresh capital. The transaction boosted consolidated capital adequacy ratio to 15.7%.
BDO Private Bank, meanwhile, is still the only onshore private banking-focused institution offering comparable services to offshore private banks. Supported by its parent BDO Unibank but organised separately, its AUM grew to P357.78 billion as of February 2017 from P308.67 billion at the end of 2015.
Best Investment Bank, Best ECM House: BDO Capital
In M&A, BDO Capital acted as the buy-side financial advisor to Far Eastern University on the acquisition of Roosevelt College for P1.0 billion.
In equity capital markets, BDO Capital worked on Cemex Holdings Philippines’s P25.1 billion IPO as the sole domestic lead underwriter.
BDO Capital was also the joint lead underwriter on Philippine conglomerate GT Capital’s P12.0 billion preferred shares issue. Proceeds from the issue were mainly used to repay short-term obligations, which were used for acquisition bridge finance. BDO Capital’s secondary market activity is primarily undertaken through three stock brokerage houses, wholly or majority owned by BDO Unibank: BDO Securities, BDO Nomura Securities, and Armstrong Securities.
BDO Capital’s stock brokerage market share has gradually been rising, helped in part by its newly formed joint venture with Nomura, which will provide retail online trading services to BDO Unibank’s client base and branches.
In terms of private debt issues, BDO Capital played a role in several big-ticket project finance transactions during the awards period, including the term loans of GNPower Dinginin, a Philippine integrated resort and entertainment company.
Best DCM House: BPI Capital
BPI Capital deserves to win the award for best DCM House because of its bond advisory work and its experience providing solutions-driven and innovative structured finance services, such as acquisition and project finance.
BPI Capital was the joint issue manager and joint lead underwriter on one of the largest retail bond offerings in 2016, for oil refiner and marketing group Petron Corp. Petron was able to raise an initial tranche of P20 billion out of a P40 billion shelf registration at the tight end of its indicative pricing range. BPI Capital was responsible for about 34% of the entire demand generated by the joint lead underwriters.
BPI Capital also executed the first shelf registration under the revised SEC regulations on behalf of Ayala Land, a format now used widely by other issuers coming to the market.
BPI Capital was also a joint issue manager for the return of the Bureau of Treasury to the retail market after an absence of three years. Despite a longer tenor, the government was able to sell P100 billion worth of bonds.
In addition, BPI Capital continued to push forward Philippine project finance and acquisition financing.
On March 31 this year, Star Energy Geothermal closed its acquisition of Chevron’s geothermal assets in Indonesia, one of the largest-ever acquisitions in the geothermal energy space. BPI Capital and DBS Bank led a syndicate of banks in arranging a $1.25 billion secured term loan facility, partly to finance the acquisition.
Best Broker: First Metro Securities Brokerage
Established in 1994, First Metro Brokerage provides equity brokering services and solutions to individuals, public and private corporations and other financial institutions.
During the awards period the brokerage brought interesting share sales to investors, including GT Capital Holdings’s issuance of series A and series B perpetual preferred shares, with a base offer size of P8 billion and an oversubscription option of P4 billion. It also marketed and sold the P7.04 billion IPO of Philippines home improvement and construction supplies retailer, Wilcon Depot, on the Philippine Stock Exchange.
First Metro Securities, part of the Metrobank Group, used research partnerships with DBS Vickers Securities Pte Ltd, University of Asia, and the Pacific and Tokai Tokyo Financial Holdings to provide insights to its brokerage clients.
During the awards period, First Metro Securities partnered with six asset managers to offer their mutual funds via its online trading platform: First Metro Asset Management; ALFM – BPI Investment Management; ATR Asset Management; Philam Asset Management; Philequity Management and Sunlife Asset Management. This allowed the firm to offer clients a broader range of services from Philippine Stock Exchange-listed stocks to peso-denominated mutual funds.
The George Ty-owned group is tapping more clients and improving their financial literacy with seminars on practical money strategies and investments. In 2016, First Metro Sec grew the number of client accounts by 55%.
It launched new products during the awards period including: version two of the FirstMetroSec mobile application, online mutual funds trading platform FundsMart, and a margin financing scheme.
The mobile app allows online account holders trade instantly via their own phones. Meanwhile FundsMart is a trading platform that enables clients to choose from 23 mutual funds. Margin financing, allows a client with at least P200,000 worth of stocks to borrow from the brokerage.
Best International Bank: Citi
Among foreign banks, Citi has the largest customer and asset base in the Philippines.
With over 7,600 employees across the country and growing, the bank needed a new flagship home. In January it began a migration to Citi Plaza in Bonifacio Global City, which will eventually house over 6,000 of its employees.
In business process outsourcing, Citi Service Centers provide voice and non-voice services to Citi affiliates, subsidiaries and branches around the world.
Cash management and trade services continued to provide key services to marquee clients. Citi is the biggest foreign bank for tax collection by the Philippines’s Bureau of Internal Revenue.
In consumer banking Citi launched its ‘Click for Cash’ facility, which allows cardholders to cash in a portion of their credit card’s credit limit with just a few clicks, without needing to login or talk to a sales officer.
Citi’s investment bank had a strong year of business in the Philippines. It acted as the joint global coordinator and bookrunner for the $536 million listing of Cemex Holdings Philippines, the largest-ever Asean building and construction IPO and the largest Philippine IPO since 2013.
Citi also acted as the exclusive financial adviser for Victoria International Container Terminal’s $398 million senior secured limited recourse greenfield project finance. VICT is the wholly owned subsidiary of Manila-headquartered International Container Terminal Services (ICTSI), which won the concession to develop a container terminal in Webb Dock, Port of Melbourne in 2014. This is one of the first cross-border project finance transactions for a Philippine sponsor.
Citi acted as deal manager to ICTSI’s liability management exercise targeting a repurchase of the company’s existing 6.25% non-call 2019 and 5.5% non-call 2021 senior perpetual capital securities via a tender offer.
Best Investment Bank: UBS
UBS outperformed across the investment banking league table for the review period, out-ranking both international and domestic banks.
It was a quiet year on the M&A front but UBS worked on some key transactions. The Swiss bank was sole advisor to Philippine Long Distance Telephone (PLDT) on its complex $1.5 billion joint acquisition of a 50% stake of San Miguel’s telecom’s business with Globe Telecom.
The deal will enable PLDT to provide mobile connectivity and digital services to its consumer and enterprise customers at affordable prices. The deal also featured a deferred consideration structure payable in three tranches over 12 months.
UBS also advised TPG on its agreement with BDO Unibank to acquire a 40% stake in One Network Bank (ONB). Both parties expect ONB’s micro-financing business to get a boost from the sharing of expertise by TPG, akin to the latter’s investment ventures into other micro-lending firms in Asia. In 2008, TPG worked with Bank Tabungan Pensiunan Nasional of Indonesia to open more than 550 new branches and create a micro-loan business.
Among equity deals, UBS was sole bookrunner on several interesting deals including JG Summit’s $250 million secondary sell down, GT Capital’s $172 million secondary sell-down, and Aboitiz Equity Ventures’s $100 million accelerated follow-on of treasury shares.
UBS was the joint global coordinator and joint bookrunner on BDO Unibank’s $1.2 billion rights offering. The rights issue price represented a 22.0% discount to the theoretical ex-rights price and a 23.4% discount to the 15-day VWAP, and implied a third quarter 2016 price-to-book multiple of 1.36 times. It was the 10th transaction UBS has worked on with BDO, the SM Group and other Sy family entities to date.