Philippines-based Security Bank eases foreign ownership level

Indirectly improving its trading dynamics.

Security Bank Corp. in the Philippines successfully issued 602.83m voting preferred shares to common shareholders at par value of PHP0.10/sh in a one-for-one rights offering.

According to a research note from Maybank Kim Eng, the issuance is part of the bank's capital program and indirectly improves its trading dynamics by addressing the limited number of shares available to foreign investors.

Foreign ownership level at 38.17 percent was near the 40 percent threshold. Post-issuance, foreign ownership eased to 21.03 percent.

Here's more from Maybank Kim Eng:

Aside from its voting feature, the preferred shares are non-cumulative, non-participating and non-convertible.

These will not be listed or traded on the stock exchange and will not form part of qualifying capital under Basel 3 rules.
Shareholders will get an annual divident rate of 3.9% for the next ten years, equivalent to the 10-year PDST-R2 rate at issue date (10 July 2014). This will be re-priced every 10 years.

Due to the non-tradeable feature of its preferred shares offering, we were expecting low participation from foreign shareholders.

Indeed, foreign investors availed only 23.4m shares or 10.2% of its total allocation. The balance of 579.4m shares was taken up by domestic shareholders. Consequently, its foreign ownership level eased to 21.03% from 38.17%.

At this level, we see some room of opportunities for foreign investors that could potentially support SECB’s share price and improve trading activities.