PSE seeks more SMEs listing

PSE prexy Hans Sicat at the SME listing forum

THE PHILIPPINE Stock Exchange has teamed up with the state-owned Development Bank of the Philippines to encourage small and medium enterprises (SME) to debut on the stock market and raise fresh funds for their expansion programs.

The PSE announced that it had recently conducted a listing forum for SMEs dubbed as “Beyond Capital Raising, A Step Toward Global Competitiveness”. The forum tackled initial public offering (IPO) requirements and processes in the Philippines, IPO experience of a listed company, advocacy for SME development and an introduction to equities investing.

“We are pleased with the number of entrepreneurs who attended the event. We hope that those in attendance will consider listing in our small, medium, and emerging board in the near future now that they have a better understanding of what it takes to be a listed company” said PSE president Hans Sicat.

This initiative is part of the memorandum of agreement signed by the PSE and DBP last year aiming to develop the local capital market. Representatives from the PSE, DBP, Securities and Exchange Commission as well as other industry experts spoke at the forum, which was attended by about a hundred SMEs.

“We thank DBP for partnering with us in our information drive to let SMEs know that they can tap the equities market to raise funds for their businesses. We look forward to more continuing programs for the SME segment to help boost interest in our capital market,” Sicat added.

Based on the PSE’s requirement for listing on the SME board, the minimum authorized capital stock is P100 million, of which, at least 25 percent is subscribed and fully paid.

The track record requirements are as follows:
– The company must have cumulative earnings before interest, taxes, depreciation and amortization (EBITDA), excluding non-recurring items, of at least P15 million for three fiscal years immediately preceding the application for listing;
– A positive EBITDA was generated in at least two of the last three fiscal years, including the fiscal year immediately preceding the filing of the application; and,
– The applicant company must be engaged in materially the same business and must have a proven track record of management throughout the last three years prior to the filing of the application for listing.

The SME should demonstrate stable financial condition and prospects for continuing growth by providing a business plan indicating the steps that have been taken and to be undertaken in order to advance its business over a period of five years.

As a general rule, financial projections are not required by any reference to future profits or losses must be included in the business plan duly reviewed by an independent accounting firm.

The SME is prohibited from listing its holding, portfolio and passive income companies. It is likewise barred from changing its primary purpose and/or secondary purpose for a period of seven years following its listing.

No offering of secondary securities is allowed for companies exempt from the track record and operating history requirements such as mining, petroleum and renewable energy companies.