DBS Group Holdings has agreed to sell its remaining 9.9 per cent stake in The Bank of the Philippine Islands (BPI) to GIC and Ayala Corporation for $850 million.
This follows the partial divestment undertaken by subsidiary DBS Bank in October 2012, and is in line with DBS Group Holdings' focus on its core markets of Singapore, Hong Kong, China, Taiwan, India and Indonesia.
DBS holds its 9.9% stake in BPI through a private joint venture company with Ayala and the divestment takes the form of a sale of DBS' shares in that company, as opposed to a sale of BPI shares.
The transaction price represents a 2.93 time multiple to the latest unaudited consolidated net book value per BPI share of PHP28.67 as at June 30 and a discount of some 10.5 per cent to the closing price per BPI share on Nov 8, the last trading day prior to the announcement.
The deal will be completed in two equal tranches, the first by the end of 2013 and the second in the first quarter of 2014.
The transaction will realise a net gain of about $447 million over the carrying value of the investment.
The transaction is not expected to have a material effect on the net tangible asset value or earnings per share of DBS Group Holdings for the financial year ending Dec 31, 2013 or Dec 31, 2014.
DBS Group Holdings chairman Peter Seah, who is also a director of GIC, has abstained from voting on all DBS board decisions in connection with this transaction.