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BUSINESS-process outsourcing (BPO) firms in the country
are so bullish on their growth prospects that most of
them are now considering generating equity funding
through various means to support their expansion plans,
a survey conducted by the Outsource2Philippines (O2P)
and the Business Processing Association of the
Philippines (BPA/P) revealed.
The
study showed 65 percent of offshoring and outsourcing
companies here are looking at offering shares either
through investment, venture capital, private placement
and initial public offering just so they could get
their hands on funds that they need to support their
projected growth.
Of those
who want to get equity funding, almost 60 percent want
to raise between P100 million and P500 million, 30
percent need less than P100 million, and 12 percent
require P500 million to P1 billion. One company said it
would target an equity infusion of P5 billion to P10
billion.
“These
results suggest that respondents are confident their
organizations will continue to grow but that access to
equity funding will impact that rate of growth,” O2P CEO
Frank Holz said in a statement.
The
survey, which targeted 305 members of BPA/P, but got
only 81 responses, was conducted from July 9 to 22.
About 44 percent of the respondents said they plan to
seek equity funding in the next one to two years, while
21 percent want to do this in the next six months to one
year.
Private
placement is the most preferred option in getting
additional funding at 54 percent, followed by venture
capital, 37 percent; IPO, 37 percent; and angel
investment, 29 percent.
About 68
percent of the respondents said the US is a good source
of equity funding; 47 percent the UK; and 44 percent
Singapore.
Only 35
percent of the respondents said the Philippines is a
good source of equity funding.
Most
respondents, or 60 percent, said funding expansion of
existing facilities and funding new business-development
initiatives are the principal motivators for seeking
equity funding. Forty-nine percent said funds raised
would be used to finance development of new facilities.
“Clearly, development of the equity market in the
Philippines can significantly accelerate industry
development,” Oscar Sañez, BPA/P CEO, said.
They
recognize, thought, that there is a backlash on this, as
53 percent of the respondents believe that lost of
control of their companies would be the biggest
disadvantage in getting equity funding.
Forty-seven percent, on the other hand, identified
burdensome regulatory requirements as a major turnoff in
pursuing this. Also, 44 percent said the availability
of other sources of funding might dissuade them from
seeking equity funding to finance expansion.
O2P and
BPA/P will conduct a senior-level breakfast briefing on
September 18 to present the results of the survey to top
industry personalities and also give presentations from
investment experts and a panel of industry executives
whose companies have sought or have plans to seek equity
funding in the future. |
