The Philippine Stock Exchange (PSE) has teamed up with the state-owned Development Bank of the Philippines to encourage more small and medium enterprises (SMEs) to debut on the stock market and raise fresh funds for their expansion programs.
The PSE announced that it recently conducted a listing forum for SMEs dubbed “Beyond Capital Raising, A Step Toward Global Competitiveness.” The forum featured presentations and panel discussions on 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.
The initiative formed part of the memorandum of agreement signed by the PSE and DBP in 2014 aimed at further developing the local capital market. Speakers from the PSE, DBP, Securities and Exchange Commission (SEC) as well as other industry experts conducted the forum, which was attended by about a hundred SMEs.
By beefing up their capital, the PSE hopes to make the country’s SMEs more competitive especially as Southeast Asian countries form a unified economy starting yearend.
In the Philippines, micro and SMEs account for 99 percent of all business enterprises and 63.7 percent of total employment.
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 must have been subscribed and fully paid.
The company must also 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 must be generated in at least two of the last three fiscal years, including the fiscal year immediately preceding the filing of the application.
The applicant company must also 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. Doris Dumlao-Abadilla