AG Finance, a Philippines-based microfinance institution (MFI), recently announced that it will embark on an initial public offering (IPO) of PHP 150 million (USD 3.4 million). The 68.1 million shares involved in the IPO, which each hold a nominal value between PHP 1.91 (USD 0.04) and PHP 2.20 (USD 0.05), will bring to public hands approximately 26 percent of the company [1]. According to AG Finance, “the net proceeds that will be received from the IPO will be [largely] used to finance the company’s professional and skilled Overseas Filipino Workers’ (OFW) loan portfolio expansion program,” an initiative that aims to offer OFWs low-interest loans primarily for their pre-deployment and relocation expenses [2]. Furthermore, PHP 47 million (USD 1.08 million) of the proceeds will be allocated for additional disbursement as loans for the 2013-2014 fiscal year, and PHP 37 million (USD 850 thousand) will be used to complete the repayment of outstanding loans with the China Banking Corporation (China Bank), a Philippines-based commercial bank [1]. The loan with China Bank carries an interest rate of six percent annually and will mature in July 2013 [3].
Banco de Oro Unibank (BDO), a Philippines-based commercial bank, will be the lead underwriter for the IPO. AG Finance’s offering is targeted to run from July 29 to August 2, 2013. The IPO price will be finalized by July 24, and the MFI’s shares are targeted for listing on the first board of the Philippine Stock Exchange by August 9 [1].
As of March 2013, AG Finance has total assets of PHP 344 million (USD 8.4 million), loans and receivables of PHP 281 million (USD 6.9 million), authorized stock capital of PHP 550 million (USD 13.5 million), approximately 4,000 active borrowers and operations in 20 countries. In the year 2010, BDO had total assets of PHP 1.0 trillion (USD 22.8 billion), gross loan portfolio of PHP 542 billion (USD 12.3 billion), deposits of PHP 783 billion (USD 17.4 billion), return on assets (ROA) of one percent, return on equity (ROE) of 11.3 percent and operations in 726 branches across the Philippines.
By Michael Averell, Research Associate
About AG Finance Established in 2001, AG Finance is a Philippines-based microfinance institution (MFI) that provides microfinance and consumer loans through its Overseas Filipino Workers (OFWs) Financing Plan. The plan aims to offer OFWs low-interest loans primarily for their pre-deployment and relocation expenses. -As of March 2013, AG Finance has total assets of PHP 344 million (USD 8.4 million), loans and receivables of PHP 281 million (USD 6.9 million), authorized stock capital of PHP 550 million (USD 13.5 million), approximately 4,000 active borrowers and operations in 20 countries.
About Banco de Oro Unibank (BDO)
Established in 1968, Banco de Oro Unibank (BDO) is a Philippines-based commercial bank that provides services in lending (corporate, middle market, SME, and consumer), deposit-taking, foreign exchange, brokering, trust and investments, credit cards, corporate cash management and remittances. Through its subsidiaries, BDO offers leasing and financing, investment banking, private banking, bancassurance, insurance brokerage and stock brokerage services. In the year 2010, BDO had total assets of PHP 1.0 trillion (USD 22.8 billion), gross loan portfolio of PHP 542 billion (USD 12.3 billion), deposits of PHP 783 billion (USD 17.4 billion), return on assets (ROA) of 1 percent, return on equity (ROE) of 11.3 percent and operations in 726 branches across the Philippines. Information on the number of depositors is unavailable.
Sources and Additional Resources
[1] Business Inquirer: “Microfinance firm sets IPO this month,” http://business.inquirer.net/130541/microfinance-firm-sets-ipo-this-month
[2] The Philippine Star News: “SEC clears AG Finance IPO, Globe Telecom’s P7-B Bonds,” http://www.philstar.com/business/2013/07/08/962831/sec-clears-ag-finance-ipo-globe-telecoms-p7-b-bonds
[3] Yahoo News: “SEC approves AG Finance IPO,” http://ph.news.yahoo.com/sec-approves-ag-finance-ipo-050010950.html
MicroCapital story, June 12, 2013, “MICROCAPITAL BRIEF: Philippines Allows Foreign Investors to Hold Stakes of up to 60% in Rural Banks,” https://www.microcapital.org/microcapital-brief-philippines-allows-foreign-investors-to-hold-stakes-of-up-to-60-in-rural-banks/
MicroCapital story, August 11, 2011 “MICROCAPITAL BRIEF: The Philippines Mobile Banking Market Handles $10b in Transactions,” https://www.microcapital.org/microcapital-brief-the-philippines-mobile-banking-market-handles-10b-in-transactions/
MicroCapital Universe Profile: AG Finance https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=AG+Finance
MicroCapital Universe Profile: Banco de Oro Unibank (BDO) https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Banco+de+Oro+Unibank+%28BDO%29
MicroCapital Universe Profile: China Banking Corporation (China Bank) https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=China+Banking+Corporation+%28China+Bank%29
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