Set to go public, Bank of Commerce plans to raise P3.5 billion

MANILA, Philippines — Bank of Commerce is looking to raise P3.5 billion in fresh capital through an initial public offering next year.

In its filing document, a copy of which was released by the Securities and Exchange Commission on Thursday, the commercial bank of conglomerate San Miguel Corp. said it is putting 280.6 million common shares up for sale at P12.5 apiece.

The offer has an overallotment option of 42.1 million shares that would be activated if investor interest proves strong, which could push the company’s fundraising to P4.2 billion. Proceeds from the maiden share sale will be used to finance the bank’s lending activities and acquisition of investment securities.

The fresh capital would also bankroll the upgrade of Bank of Commerce’s automated teller machine network. About P522 million of the proceeds are intended for this purposed.

But more importantly, Bank of Commerce is raising cash to support its plans to obtain a universal banking license in the future.

The company will go public in 2022, the exact date of which is still being finalized. Already, analysts like Arielle Santos, banking sector analyst for local brokerage Regina Capital, noted that investors would view the share sale favorably if it pushes through next year. 

“In my opinion, if the Bank of Commerce would proceed with its IPO next year, investors would likely view the offer more positively by then. Of course, this would be in the assumption that concerns on Omicron would've faded already going into 2022,” Santos said in a Viber exchange. 

But Aniceto Pangan of Diversified Securities believes the market might be too volatile at the moment as fears over the new coronavirus variant lingers, which could be bad for IPOs.

“With the just recent outcome of Medilines IPO, investors definitely has turned negative. Also, it's still early at this stage with the pandemic virus contagiously spreading around the globe especially at West,” Pangan said in a text message, referring to the painful stock market debut of medical equipment company owned by Virgilio Villar, brother of tycoon Manny Villar.

“Also, (Bangko Sentral ng Pilipinas) has stated that we are not out of the woods yet at this point,” he added.

But Regina Capital’s Santos noted that Bank of Commerce’s planned IPO would likely fare better if business activity picks up amid easing pandemic restrictions. This “would ultimately accelerate the restoration of business and consumer confidence,” Santos added. 

In the first nine months, Bank of Commerce reported a net income of P625.7 million, up 26.3% year-on-year, thanks to higher interest income and lower provisions for credit losses.