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Stock Commentary

Can I buy more than my “share” of the UBP SRO?

Merkado Barkada
Can I buy more than my âshareâ of the UBP SRO?

Yes, you can try! 

Retail investors (regular people like you and me) are usually allowed to participate in two rounds of a stock rights offering (SRO), but the mechanics of how to do this are not often talked about.

In the first round of an SRO, each shareholder is given the ability to purchase the number of SRO shares that their ownership entitles them to purchase.

Since participation is optional, some shareholders elect to buy and pay for their entire entitlement amount, while others buy only a partial amount or ignore the SRO altogether.

It’s rare 100% of eligible shareholders to purchase 100% of their eligible entitlements in the first round, so there’s often a pool of SRO shares that are leftover after the first round that shareholders can attempt to purchase under certain conditions.

Here, for the Union Bank [link] SRO, the linked Procedures and Implementing Guidelines document outlines how to do it.

The basics are this: you need to specify the number of second round shares you’d like to buy, and pay for those second round shares in full, at the same time that you apply to purchase your first round shares.

Given the uncertain size of the second round pool of shares, there are no guarantees that the number of shares you specify will be granted, and in cases where demand exceeds supply, this document says that shares will be allocated by UBP according to its discretion, but “primarily” in accordance to each shareholder’s proportional shareholding.
 

MB BOTTOM-LINE

For a document outlining legal rights, the linked Procedures and Implementing Guidelines doc is not that hard to read.

I recommend giving it a look if you’re interested in this SRO.

If this is your first time buying SRO shares, or your first time trying to buy additional SRO shares, I’d recommend getting in contact with your broker to see how to proceed.

Please do not consider this bit to be a wink-wink-nudge-nudge to UBP shareholders that they should look to purchase more than their first round entitlement.

I’m not trying to whip up FOMO and juice this deal.

I’ve just received a number of questions on this topic over the past few SROs, and I felt that this document was particularly “approachable” and minimal in terms of its reliance on weird legalese. 

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Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the newsletter or follow on Twitter to receive the full daily updates.
Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.

PHILIPPINE STOCK EXCHANGE

STOCK RIGHTS OFFERING

UNION BANK OF THE PHILIPPINES

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