MANY companies planning to list at the Philippine Stock Exchange (PSE) are now assessing their next moves as going public amid price volatility may not be in their best interest.
Eduardo Olbes, Security Bank Corp. EVP and head of corporate and investment banking segment, said all of the firms they are talking to right now are waiting for the “right time” to go public, the timetable of which may extend on the result of the Presidential elections in May.
“The equity market is unfortunately experiencing a lot of volatility. That’s not very conducive for pricing IPOs [initial public offerings]. So ideally, you want to see stability first in the market,” Olbes said.
“We’re working on a few that are publicly disclosed, but all those companies are currently assessing. It doesn’t seem to be the right time now because of the volatility. They [are] assessing all their options and are waiting for a better environment,” he said.
Its unit SB Capital Investment Corp. is one of the issue managers of the P2.09-billion IPO of Pointwest Technologies Corp., which failed to hurdle regulatory approval last year.
SB Capital earlier said it is talking to two to three mid-cap firms that plans to go public this year. Its deals include the P1.4-billion IPO of Xurpas Inc. in 2014 and the follow-on offering of Cirtek Holdings Philippines Inc. and Integrated Micro-Electronics Inc. last year.
Last year, at least two large companies that have already hurdled regulatory approvals have postponed their respective IPOs, citing jittery markets. Several others, such as the P190-million IPO of Philstocks Financials Inc., the P95-million listing of Gweilo Corp. and the P290-million listing of Green Power Panay Philippines Inc. all failed to make it to the approvals of either the PSE or the Securities and Exchange Commission.
Those firms that postponed the IPO were the P21.7-billion listing of construction firm and property developer DM Wenceslao and Associates Inc. and the P4.66-billion prospect of another construction firm Datem Inc. of the Espiritu family. These firms postponed their respective listing since November last year.
With the market’s steep fall since the start of the new year, the timetables of companies going public have all changed as the national election is also fast approaching.
Olbes explained the elections may impede the IPO of the larger deals, since foreign investors tend to worry about the election results.
For smaller deals, the national election won’t be a constraint as the bulk of the buyers are local investors.
Previously, foreign funds enter when a deal will fall between a minimum order of P100 million and P150 million. That rule of thumb, however, changed as foreign investors were seen participating even in smaller deals.
“But the bigger the deal is, you will have to market to foreign investors, and therefore, their concern on what will happen on the elections would be more relevant on their decision-making,” he said.
PSE President Hans B. Sicat said he is still confident that there will be between eight listings and 10 listings this year. He said companies still have a small window to raise funds at the start of the year.
“There will be a lot of private placements, follow-on offerings, because all those listed companies have a window to do so. And the question in the capital market whether these companies will issue corporate funds at a record pace. The big conglomerates are beginning to run into single borrowing limits in banks. so they really have to go to the corporate bonds,” Sicat said.