Local firms urged to explore mergers, acquisitions

MANILA, Philippines - The Bank of the Philippine Islands (BPI) is urging local firms to be more aggressive in raising capital and explore more merger & acquisition (M&A) opportunities.

BPI executive vice president and Corporate and Investment Banking Group head Alfonso L. Salcedo said M&As, equity offerings, bond issuances and other capital-raising opportunities constitute “a perfect storm” created by the strong economy, regional integration, and attention from foreign investors.

 â€œThere’s a perfect storm. And it’s really an excellent time for Philippine companies to consider ways to grow their business. It stems from the economy. You’ve got lots of liquidity. Interest rates are very low. And when you have low interest rates, the hurdle rates for businesses are much lower,” he said.

The integration of the economics of the Association of Southeast Asian Nations (ASEAN) should make companies think about getting ready for competition ahead of 2015. It also indicates that local firms and corporates need to strengthen their positions in the local market, Salcedo noted.

BPI Capital Inc. co-head Dennis Montecillo said they are in a position to help Philippine businesses unlock value for their shareholders and owners. While lending is still at the center of BPI’s offerings, BPI Capital offers solutions and advice to help companies grow their businesses.

BPI Capital has a full range of capital markets and advisory services in order to provide all possible solutions, whether in bonds, notes, convertible instruments, M&A advice, consolidation, strategic legal advice, private equity, or merchant banking.

Businesses that will best benefit from capital markets and advisory services are: companies that used to hire foreign investment banks to do this kind of work; family businesses that are looking to unlock value in their family companies to prepare for world-class competition and the upcoming ASEAN integration; companies that are looking to streamline by disposing of a non-core business, or buy up or buy into competitors or allied fields; and, foreign companies (including private equity funds) that are looking to expand their businesses in the Philippines.

 â€œEntrepreneurs are experts in their field, but are less informed about the financial options available to them and their business. You can have a multibillion-per-year company, built by an owner whose business expertise is second to none. That may be his expertise, but BPI Capital can provide perspectives on capital structure that is second to none,” Montecillo said.

He said BPI Capital has built a unique team made up of long-time BPI veterans and professionals with experience working in New York, Hong Kong and Singapore.

 â€œIn some ways that’s the genius of the mix-you put different people together with different perspectives and when they talk to each other and work with each other, good things happen,” he added.