Mostly in fast-moving consumer goods
INVESTMENT banking firm First Metro Investment Corp. (FMIC) expects to underwrite more than eight capital market fundraising deals this year, mostly in the first half, as issuers take advantage of the low interest rate environment before the actual rate hikes set in for the rest of 2017.
FMIC Executive Vice President Justino Juan Ocampo said on Thursday the company is expecting to underwrite “three to five” equity fundraisings valued at about P1 billion to P3 billion each, and “at least three” bond issuances.
This does not include the P7.9-billion initial public offering (IPO) of home improvement chain Wilcon Depot Inc. FMIC has been appointed the issue manager, lead underwriter, and bookrunner for the Wilcon market debut.
He said the deals FMIC are arranging at present are mostly in the fast moving consumer goods (FMCG) sector.
“We expect [this year]to be hectic. We think companies will take advantage of this window as [interest]rates are expected to go up…I think it will be loaded for the first semester. It’s better to present in the first half [because]it is certain that interest rates will go up, as well as other factors that might affect the markets [for the rest of the year],” Ocampo said.
Aside from the capital market fundraising initiatives, Ocampo said there will also be several merger and acquisition (M&A) transactions this year as outside investors are continuously looking at the outperforming Philippine economy.
He said FMIC is expected to close at least one M&A underwriting deal in the first half of the year.
“Our Asian neighbors are looking at manufacturing, food production, and FMCG. We’re focusing on those sectors because a lot of Philippine companies need partners to upgrade their capacity and value added products. It’s a win-win, and we think there’s a synergy. That’s our focus. We see a lot of prospects in this area,” Ocampo said.
According to the FMIC Annual Economic and Capital Markets Outlook released on Thursday, bond issuances grew by 15.38 percent to P105 billion in 2016 from P91 billion in 2015.
In spite healthy fundraisings done in fixed income markets, equity capital raised in the Philippine Stock Exchange declined by 7 percent to P10.53 billion in 2016 compared to P11.41 billion in 2015.
But for 2017, FMIC views capital markets to be liquid and to leverage on the robust Philippine economy. The investment bank projects the domestic gross domestic product to grow by 7 percent to 7.5 percent this year.