DBS Group, Southeast Asia's largest lender, agreed to sell its remaining stake in Bank of the Philippine Islands (BPI) for S$850 million (HK$5.27 billion) to focus on key markets including Singapore and Hong Kong.
The transaction, to be completed in two phases by March next year, would generate a gain of about S$447 million over the carrying value, DBS said.
The 9.9 per cent indirect ownership will be acquired by GIC, Singapore's sovereign wealth fund, and Ayala, the Philippine firm that is already BPI's largest stakeholder.
DBS began exiting its 14-year investment in BPI, the largest lender by market value in the Philippines, last month as chief executive Piyush Gupta sought to bolster capital buffers. Growth in the Philippine economy, which has expanded by more than 7 per cent for four quarters, may slow this year after Typhoon Haiyan devastated some provinces.
"In the last two years, the Philippines became a very hot market," said Kenneth Ng, an analyst at CIMB-GK Securities. "One of the reasons why they sold was that the rising Philippine market gave them the opportunity to do so."
Shares of BPI yesterday closed unchanged at 90.50 pesos (HK$15.97). The stock has gained 6.2 per cent over the past year.
GIC will buy 5.6 per cent of the Philippine bank and Ayala will purchase 4.3 per cent, lifting its stake to 48.3 per cent, Ayala said in a statement yesterday.
"This acquisition is both a value and earnings accretive investment for Ayala," Ayala president and chief operating officer Fernando Zobel de Ayala said in the statement. "BPI has been a significant growth driver for Ayala over the years and we believe its earnings growth momentum will continue in step with the expansion of the Philippine economy."