MANILA, Philippines—The Philippine Stock Exchange expects P197 billion in capital-raising activities in its bourse this year, a new record high, as companies ride on the bullish market to pursue initial public offering (IPO), follow-on offering and private placement exercises.
In a briefing Friday, PSE president Hans Sicat said this year’s equity fund-raising would likely outpace last year’s level of P107.5 billion, which was already an all-time high.
The estimated value of capital-raising is based on intentions expressed by bankers and lawyers of companies that were either publicly listed or about to go public, Sicat said.
The amount also included the upcoming IPOs of GT Capital Holdings of taipan George Ty and the Gotianuns’ banking arm East West Bank. The IPOs of these two companies have been approved by the PSE board, Sicat said.
GT Capital is raising as much as P24.6 billion from an April IPO while East West Bank is planning a stock debut of up to P6.63 billion, marking the first initial public offering by a local bank in eight years. Both IPOs have also been approved by the Securities and Exchange Commission.
With the robust stock market performance this year, Sicat said that apart from companies raising fresh capital for expansion, the good valuations make it compelling for companies to sell shares to meet the 10-percent minimum public ownership required by the PSE for continued listing. By 2013, it plans to suspend trading on all companies failing to meet this requirement.
“I think the bigger motivator is that the market’s so good [that] if you can’t do it now when you’re a listed company and valuations are so robust, when can you do it?” Sicat said.
There are at least 36 companies that are currently short of the PSE’s minimum public ownership requirement.
Another good thing going for the market, Sicat said, was that even as there has been a strong surge in foreign portfolio investments, domestic investor participation was rising. To date, he said foreign investors’ share in stock trading has gone down to 38.5 percent from slightly above 40 percent last year, which Sicat said was indicative of how the local investment community was giving companies a lot of leeway for fund-raising.
But Sicat said the penetration of the stock market was still very low. Moving forward, he said the PSE would like to reach out to a new breed of young local investors who were not scared of using technology and could thus embrace online trading. Already out there, Sicat said, was a ready set of market comprising of people who have basic checking and savings account.
At present, the PSE estimates the retail investor base at 550,000 to 600,000, which is still a very small segment of the country’s population of 100 million.