Renewables seen to dominate IPO scene in 2025

As the dovish business cycle begins, the Philippines may see more companies braving the stock market next year, with renewable energy firms leading the charge.

Unicapital Securities Inc. head of research Wendy Estacio-Cruz told the Inquirer that they were expecting at least five companies to launch initial public offerings (IPOs) next year, given declining interest rates.

“We’re expecting more investor confidence, especially for next year, and with that, corporates will be more encouraged to do IPOs,” Estacio-Cruz said on the sidelines of Unicapital’s recent briefing.

READ: SEC issues new rules covering large IPO investors

In a high interest rate environment, investors typically put their money in the debt market rather than equities due to higher yields, thus discouraging companies from going public, Unicapital president and CEO Jaime Martirez explained.

Such was the case in the first six months of the year, when the country saw 15 bond listings against two IPOs.

According to Estacio-Cruz, corporates in the renewable energy sector showed the most optimism about the stock market next year, especially since foreign investors are taking much interest in these kinds of companies.

In the January to June period, the Department of Trade and Industry noted a 36-percent increase in investments approved by the Board of Investments to P950 billion.

The bulk of these again went to the renewable energy sector, a trend which has been observed since the government allowed 100-percent foreign ownership in renewable energy projects in November 2022.

This year alone, two of the three IPOs seen so far were launched by clean energy-focused companies: Edgar Saavedra-led Citicore Renewable Energy Corp. (CREC) on the main board of the Philippine Stock Exchange (PSE), and Dexter Tiu-led NexGen Energy Corp. on the small, medium and emerging board.

In 2023, Alternergy Holdings Corp. and Repower Energy Development Corp. both listed on the main board.

READ: Significant increase in renewable energy investments seen

Martirez pointed out that the Bangko Sentral ng Pilipinas’ move to cut interest rates by 25 basis points early this month was the cue sought by companies waiting on the sidelines before launching IPOs.

“When interest rates start to stabilize, there will be more [IPOs] to come, and there will be a gradual shift to the equities market,” Martirez said during a press briefing.

The PSE earlier set a target of six listings this year. OceanaGold (Philippines) Inc. was the first to launch an IPO in May, followed by CREC in June and NexGen in July.

In November, Cebu-based fuel retailer Top Line Development Corp. hopes to raise P3.16 billion from the stock market via an IPO, which regulators have yet to approve.

Although it was “difficult” to tell whether there would be more IPOs this year, Martirez noted that there was still “interest in doing listings” among the Philippine companies.

“It’s just really a matter of waiting for the right time and the market conditions to improve,” he said.