At least 10 companies are expected to debut next year, potentially bringing P50 billion worth of initial public offerings (IPOs) against a backdrop of lower rates and a revitalized attention for the stock market.
“Since interest rates are falling, companies want to raise capital through IPOs,” BDO Capital and Investment Corp. president Eduardo Francisco told reporters on the sidelines of the Economic Journalists Association of the Philippines forum on Friday. Francisco previously forecast seven companies debuting next year.
The new projection is triple the number of companies that have so far braved the tepid stock market this year.
BDO Capital often serves as the underwriter, or one that purchases shares from the issuer and sells these to the public, in domestic IPOs or adviser for interested companies.
More favorable
Up to three companies are expected to debut on the Philippine Stock Exchange (PSE) by the first half of 2025, while the remaining seven will likely list in the latter half, according to Francisco.
These IPOs would likely have an average size of P5 billion each, he added.
This comes a month after the Bangko Sentral ng Pilipinas (BSP) cut interest rates by 25 basis points to 6.25 percent, its first monetary policy easing since 2020.
Lower interest rates are typically more favorable for equities as companies could fuel their growth through more investments via cheaper loans.
A thriving stock market could also lure away investors from fixed-income investments, which saw a rise in popularity in recent years as they gave better yields.
Francisco noted that prospective IPO issuers may also want to wait for the BSP to further cut rates and reduce this to around 5.5 percent to 5 percent.
“If it goes down [to that level], then equities will become very interesting,” he said, adding that the potential IPOs next year could come from the real estate, consumer, food and beverage and retail sectors.
No candidate from energy?
Despite the recent boom in the renewable energy industry as seen in the IPO market, Francisco said they have not heard from energy companies for next year’s listings, as these firms still need to finish building power plants to generate income.
“When you do an IPO, you must already have existing projects … If their projects are big enough, then they can launch an IPO,” he said.
Only four renewable energy companies have listed on the PSE in the past two years: Alternergy Holdings Corp. and Repower Energy Development Corp. in 2023, and Citicore Renewable Energy Corp. and NexGen Energy Corp. this year.
Three highly anticipated IPOs have been deferred indefinitely due to “volatile market conditions”: Sy family-led SM Prime Holdings Inc.’s real estate investment trust, Razon-led Prime Infrastructure and Ayala-backed e-wallet platform GCash. INQ