PSE aims to corner P200B in deals in 2019

Despite falling into a bear market, the Philippine Stock Exchange (PSE) is targeting equity deals to reach P200 billion next year, whether through initial public offerings (IPOs), private placements, follow-on offerings or stock rights offerings.

This was the same target set for 2018, but which the PSE did not meet as two IPO candidates—food producer Del Monte Philippines and consumer electronics manufacturer Cal-Comp Technology (Philippines)—backed out due to challenging market conditions.

“We hit P187.84 billion [this 2018]. We’re still P12 billion short,” PSE president Ramon Monzon said in a press chat on Tuesday night.

The PSE targeted to have eight IPOs for 2018 but only one materialized—that of San Miguel Food and Beverage.

Based on data from the PSE, bulk of the capital raised from the stock market this year came from stock rights offerings, amounting to P163.34 billion.  This, as some of the country’s big banks beefed up their capital to prepare for expansion.

11% improvement

There was P11.5 billion raised from private placement, P8.15 billion from the primary shares component of the IPO of San Miguel F&B and P4.82 billion from follow-on offerings.

Still, the P187.84-billion capital raised from the PSE marked an 11-percent improvement from the P167 billion raised last year even as the market reversed from bullish to bearish this year.

“Can we repeat that feat next year? I hope so, but what are the challenges? All the big banks have already raised their capital—Metrobank, BPI, RCBC and Unionbank,” Monzon said.

The stock rights offering accounted for most of this year’s equity deals because of large banking issues.

Fundraising needs

Monzon also noted banking and securities regulators had eased regulations for banks’ bond offerings. Thus, banks have been flocking to the bond market for their fundraising needs.

“Reserve requirement is very small so you have more funds to lend out (if banks tap the bond market). So I don’t know where to get our budget next year,” Monzon said.

Still, Monzon is not scared to target a larger goal next year.

If the market would recover to a high 7,000 to 8,000 levels, he said the appetite for IPOs might improve.

Another IPO candidate just waiting for the market to improve is carrier AirAsia Philippines. This airline also had to defer its IPO because of the six-month closure of Boracay, which in turn gnawed on its business this year.