The Philippine Stock Exchange is cautiously optimistic for the year, setting a target of just four initial public offerings (IPOs). This modest goal reflects a more conservative outlook after last year’s fundraising efforts fell short of expectations.
Exchange President and CEO Ramon Monzon revealed the target, alongside an ambition to raise between P170 billion and P175 billion in capital – a step up from the P144.14 billion secured in the previous year. However, achieving this hinges on overcoming headwinds that dampened investor enthusiasm.
Last year saw only two companies successfully list: Cebu-based fuel distributor Top Line Business Development Corp. and Maynilad Water Services, Inc. This was significantly below the initial target of six, highlighting the challenges in attracting companies to go public.
Among those anticipated to potentially enter the market this year are GCash, the popular electronic wallet platform, and PNB Holdings Corp. through a listing by introduction. The order of their debuts remains uncertain, with Globe Telecom also potentially moving forward with a listing.
GCash’s long-awaited IPO is closely tied to a pending revision of the minimum public ownership requirement by the Securities and Exchange Commission (SEC). The current 20% requirement is considered too high for the market to readily absorb, especially for a company with a substantial market value.
The proposed rule change would lower the public float to 12% for companies exceeding P150 billion in market value, like GCash’s parent company, Globe Fintech Innovations, Inc. (Mynt). A previous attempt to launch the IPO was delayed due to a downturn in the stock market.
GCash is reportedly aiming to raise between $1 billion and $1.5 billion through the offering. Meanwhile, PNB Holdings Corp., a subsidiary of LT Group, Inc., has already filed for registration with the SEC, preparing for a listing by introduction – a method that doesn’t immediately raise capital.
Several companies postponed their IPO plans last year, including Hann Holdings, Inc., an SM Prime Holdings real estate investment trust, and Prime Infrastructure Capital, Inc., signaling a broader hesitancy among potential issuers.
Underlying the cautious outlook is a significant issue of investor confidence. A corruption scandal involving flood control projects has cast a shadow over the market, contributing to a decline in the PSE index.
The PSEi closed the previous year at 6,052.92, a 7.29% decrease from the end of the prior year. A particularly sharp drop in November saw the index reach a five-and-a-half-year low, reflecting the impact of the scandal.
Monzon emphasized the need for concrete action to restore trust, specifically calling for high-profile arrests related to the corruption allegations. He believes that visible accountability is crucial to sending a strong message about improved governance and transparency.
An independent commission is currently investigating claims of widespread kickbacks in the flood control projects, and the outcome of this investigation is seen as pivotal in rebuilding investor confidence and attracting future listings.
