IPO market more challenging for rest of 2022

The initial public offering (IPO) market has turned more challenging for the remainder of 2022 amid an era of rising interest rates and intensifying geopolitical uncertainties, but the Philippine Stock Exchange (PSE) has vowed to work even harder to bring more companies to public hands.

“The first half was really good but we have very challenging rest of year. The potential issuers are the same but it’s really the global uncertainties of inflation and possible recession causing a pause. Investors are more cautious in investing in equities so they shifted to corporate bonds and even this current RTB (retail Treasury bonds),” Eduardo Francisco, president of BDO Capital & Investment Corp. said in a text message on Thursday.

“So large deals are hard to do as we need foreign investors,” Francisco said, adding however that smaller local deals would still be “doable.”

“I hope by next year, interest rates will stabilize and Ukraine will be resolved,” he said referring to Russia’s invasion of its neighbor, now on its sixth month. “As long as China-Taiwan [tensions] also doesn’t get worse, then we will get back on track.”

Francisco is among the resource persons tapped by the PSE to speak at the “Road to IPO 2022” on Sept. 15, a virtual event that aims to gather business owners who would like to know more about the benefits of IPO listing and the requirements and processes in successfully conducting a maiden share offering.

PSE encouragement

Despite the uncertainties, however, the PSE aims to help more companies brave the capital market.

“We have had a robust IPO since last year. With more companies inquiring how they can tap the equities market for capital to fund their expansion, we deemed it was essential to offer a more comprehensive road to IPO program,” said Ramon Monzon, president and CEO of PSE.

Based on PSE data, eight new names have debuted on the stock market so far this year: Haus Talk Inc. (which raised P750 million); Citicore Energy REIT Corp. (P6.4 billion); Figaro Coffee Group (P767.39 million); CTS Global Equity Group (P1.38 billion); Bank of Commerce (P3.37 billion); Raslag Corp. (P805 million); Vista REIT (P4.81 billion) and Balai ni Fruitas (P288.75 million).

In addition, there were five companies that raised fresh capital through private placements this year: Greenergy Holdings (P752.54 million); Discovery World Corp. (P76 million);

Furthermore, three companies completed new stock rights offerings so far in 2022: Union Bank of the Philippines (P40 billion); Philex Mining Corp. (P2.65 billion) and Manila Mining Corp. (P14.96 million).

More issuers are in the capital market pipeline this year, beginning with Solar Philippines Nueva Ecija Corp. (SPNEC), which is raising P2.8 billion from a stock rights offering. Globe Telecom is also planning to raise P32 billion from the sale of shares to existing investors.

New names

On the other hand, the new names in the IPO pipeline of the PSE are: Upon International Corp. (P5.43 billion); Prime Infrastructure Capital Inc. (P28.2 billion); and Alterenergy Holdings Corp. (P2.18 billion).

The upcoming IPO forum will showcase a fireside chat on the fund-raising success stories of selected listed companies. Featured speakers in this segment are DMCI Holdings, Inc. founding director, chief finance officer Herbert Consunji, GT Capital Holdings, Inc. chair Francisco Sebastian and JG Summit Holdings president and CEO Lance Gokongwei.

The PSE also invited its Listing Engagement and Assistance Program (LEAP) partners to host virtual booths during the event, where participants can schedule online consultations and meetings. LEAP is a marketing program focused on assisting interested and potential listing applicants by providing handholding guidance to clients via one on one advisory sessions, access to online pre-listing assessment tools and assistance in connecting potential clients to seasoned IPO advisors.