Veteran stockbroker Edward Lee’s CTS Global Equity Group Inc. is pushing through with a P1.37 billion initial public offering (IPO) this month to raise cash for larger bets on stock markets in the United States, Hong Kong and Japan.
The firm secured the approval of the Philippine Stock Exchange (PSE) to conduct an IPO and also revised the offer timetable in a new prospects dated March 17.
CTS Global said it would set the final price for the sale of 1.37 billion shares—tentatively set at P1 each—on March 21 with the formal offer period to run from March 29 until April 4 this year.
The company is targeting to make its PSE trading debut on April 13 under the symbol “CTS”.
Established in 1975 as B. L Tan Securities Inc., the company adopted its present name in 2020, signalling its new direction to focus on overseas equities.
It said in the prospectus that over 90 percent of IPO proceeds would be used to upsize the capital of its pool of 40 traders managing nearly P550 million as of September last year.
CTS Global wants to shift more of its trading revenues to overseas markets to eventually hit 75 percent by 2025 from the present 37 percent. The rest would come from Philippine equities.
The company is chaired by Lee, who is best known for founding and growing COL Financial Group Inc. into the country’s leading online stock brokerage house.
Similarities and differences
CTS Global and COL Financial, which is also listed on the PSE, share a number of similar directors. But CTS Global said it differed from COL Financial given the latter’s focus on online retail accounts and lack of proprietary trading as part of its business model.
CTS Global said it would also build a client accounts management segment to offer to interested customers.
“During the first few years in business, this segment will need the capital to fund the initial expansion in operation. For its clients account management, CTS will use brokers authorized or licensed to operate in the various markets that its clients will invest in,” it said in the prospectus.
By 2030, CTS Global said it was aiming to grow proprietary trading and client management revenues to P1 billion.
Revenues in 2020 hit P172.26 million, up 267 percent, while profit hit P46.89 million, reversing a P32.5 million loss the previous year.
Based on the prospectus, CTS Global reduced its pool of traders by 17 percent to 39 traders as the global pandemic arrived in 2020. Average revenues per trader in 2020 surged 341 percent to P4.42 million.
At the maximum offer price of P1 per share, CTS Global would have a market value of P6.87 billion upon listing. SB Capital was hired as the sole underwriter, issue manager and book runner.