GCash IPO seen reshaping PSEi rules

The planned stock market debut of GCash parent Mynt could do more than unlock value for its shareholders—it may also push the Philippine Stock Exchange (PSE) to rethink the rules governing its benchmark index. This is according to April Lee-Tan, chief equity strategist at COL Financial.

Lee-Tan said Mynt’s planned initial public offering (IPO), which is expected to float only 12.5 percent of the company, could prompt the exchange to revisit the minimum public float requirement for inclusion in the Philippine Stock Exchange Index (PSEi).

“Mynt is going to be listing only 12.5 percent of the company,” she said. “For Mynt to become part of the PSEi index, they would have to allow companies with a free float of less than 20 percent to be part of the PSEi.”

Under the current index methodology, companies must maintain a public float of at least 20 percent to qualify for inclusion in the PSEi, aside from meeting market capitalization and liquidity requirements.

Lee-Tan said relaxing that threshold would not only pave the way for Mynt to enter the country’s 30-member benchmark index but could also benefit other listed firms that currently fall short of the minimum float requirement.

“If that happens, you might see other companies like AboitizPower be included back into the index,” she said.

Her remarks come as the PSE itself is pursuing broader reforms to its listing framework.

The exchange has proposed lowering minimum public ownership requirements for large IPOs to attract bigger listings.

Under the proposal, companies with a market capitalization exceeding P50 billion could list with a 15-percent public float, while exceptionally large firms valued at P200 billion or more could be allowed to go as low as 12 percent, subject to regulatory approval and safeguards.

While those proposed changes apply to listing requirements rather than PSEi eligibility, Lee-Tan said Mynt’s IPO could eventually strengthen the case for aligning the benchmark index rules with the evolving listing framework.

Beyond the rule changes, she believes Mynt’s listing would be a positive development for the broader market.

For one, it could help narrow what she described as a long-standing gap in the Philippine stock market, which has relatively few technology companies compared with regional peers.

“For the longest time, one of the issues that investors have in the Philippines is that we are all traditional companies,” Lee-Tan said. “We’re not part of the other markets that have tech stocks, but with the listing of GCash, it changes that.”

If Mynt performs well after its listing and eventually joins the PSEi, Lee-Tan said it could also attract more passive and institutional investors that track the benchmark index, potentially improving liquidity and supporting the local equities market over the long term. INQ