INVESTMENT bank First Metro Investment Corporation (FMIC) expects to manage in 2016 issue deals of three to five “bite-sized” companies wishing to debut at the stock market and raise funds for expansion.
Justino Juan Ocampo, FMIC executive vice president and head of Investment Banking Group, told reporters after FMIC’s 2016 Economic and Capital Markets briefing
Wednesday that it has three to five deals of equity offerings for 2016, which are still in various stages of completion.
“All [of the deals]are still work in progress, mostly [seen to be done]in the latter part of the year,” Ocampo said.
“I would say they are typically bite sized, the three to five [companies looking to raise funds in the stock market],” he added.
The anticipated fundraising deals are not restricted to maiden offering or initial public offering (IPO), but it can be in other forms of share offerings, such as follow-on offering, stock rights offering, preferred shares offering, and private placements, Ocampo said.
He said “bite-sized” fund raisings usually range from P1 billion to P3 billion.
Ocampo noted that even foreign investors, whether individuals or institutional, are now also looking at bite-sized transactions as low as P1 billion to P2 billion.
These transactions for 2016, he said, are in the “sweet spot” sectors, such as consumer, property, and construction—sectors that are seen to benefit the most from the ongoing infrastructure projects and election spending this year.
He said the upcoming deals do not include the deferred IPO of Datem Inc. (P4.65 billion), which FMIC handles, with BPI Capital as the issue’s coordinators, lead underwriters, and book runners.
Ocampo revealed that Datem “decided to defer [its IPO]in the second half,” waiting for the turnout of the May elections.
The FMIC EVP also said the rise of bite-sized deals appeals to local investors, which are now more involved in investing than in the past years.
“Bottom line of this, domestic investors already have the ability to invest,” Ocampo said.
He also noted that more smaller-sized companies are already engaging in mergers and acquisitions, which lead them to source financing at the capital markets— whether debt-raising through bonds issue or equity-raising via maiden offering or IPO.
The trend now with these smaller companies, Ocampo said, is that they tend to borrow money from banks to fund acquisitions and expansion plans, and then later raise funds in the stock market through IPO to balance its debt-to-equity ratio.
An IPO will also raise a firm’s status and give it more recognition, paving the way to its becoming a bigger firm in the future.
Aside from Datem and the upcoming FMIC deals, the pipeline of IPOs for this year consist of mostly small- to medium-sized companies. These include Gweilo Corp., Philstocks Financial Inc., Philippine Primark Properties Inc., and Pointwest Technologies Corp.
Other market debuts in the pipeline this year are: the delayed IPO of DM Wenceslao & Associates Inc. (P10.729 billion), as well as those of Pro-Friends or Company of Friends Inc., Green Power Panay Philippines Inc., and Pilipinas Shell Petroleum Corp., among others.
The Philippine Stock Exchange earlier said it expects eight to 10 listings this year—either through IPOs, listing by way of introduction, or backdoor listing.