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By Likha C. Cuevas-Miel Reporter
AMID volatile financial markets,
companies are changing gear, with some firms set to sell their
shares for the first time to the public pushing back plans towards
the end of the year.
Cebu Air Inc., which operates
Cebu Pacific, announced on Wednesday that it cancelled its planned
international road show and is postponing its initial public
offering (IPO) indefinitely due to the “extreme volatility” in
global markets.
“Despite positive feedback
regarding the company from international and domestic investors
during the management road show, the timing and execution of the IPO
has been overshadowed by global economic concerns,” the Gokongwei-led
airline said in a statement.
The postponement, however, would
not affect the company’s expansion plans, which are “not at
risk” due to the delay.
Jose Pacifico Marcelo of First
Metro Investment Corp., which was supposed to underwrite the Cebu
Pacific offering, said companies are scheduling most of their IPOs
toward the end of the year, provided they don’t drop their plans
altogether and resort to bank borrowings for their expansion plans.
“However, it would be difficult
since the IPOs would crowd the market towards the end of the
year,” he said.
Last year, traders had complained
to the Philippine Stock Exchange that crowded share offerings give
brokerage firms a hard time allocating their time and resources to
these capital-raising activities. Some offerings even tanked on
their first trading day due to the lack of volume compounded by the
growing subprime problems during the middle of 2007.
Main concern is when market
bottoms out
The main concern right now,
Marcelo said, is determining when the market bottoms out so that
these companies can enter the market.
Prince Yeung, equities analyst at
AB Capital Securities, said Cebu Pacifc’s postponement was good
since the market is hostile to any firm bold enough to raise capital
at this time
“Even if the fundamentals of
Cebu Pacific are good,” it would have to be flexible enough to
offer certain discounts to its offer price and risk obtaining lower
proceeds had it pursued its original timetable, he said.
Yeung cited Pepsi-Cola
Philippines Inc., which pushed through with its offering amid the
maelstrom. The soft drink maker however paid the price by slashing
its offer to the low end to attract enough buyers, he said.
The analyst said other companies
are likely to take their cue from Cebu Pacific.
Eduardo Francisco, president of
BDO Capital and Investment Corp., said Petrolift Inc. also pushed
back its maiden share offering to end-February instead of this month
as the underwriter foresaw that markets would be too murky to wade
in.
Francisco, however, said there is
no firm timetable. The tanker company is now in discussions with
potential strategic investors who may be interested in buying the
foreign component of the planned IPO. This would somehow perk up the
interest of local buyers, he said.
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