THE Philippine Stock Exchange (PSE) sees huge potential in more small and medium enterprises (SMEs) listing on the local bourse to raise funds to grow their businesses.
During the Pilipinas Conference on Thursday, PSE President Hans Sicat said the PSE is currently conducting a “mentoring system” in partnership with the Philippine Chamber of Commerce and Industry (PCCI) to encourage SMEs nationwide to raise funds by selling shares or bonds and eventually listing on the local bourse.
“SMEs employ two-thirds of the workforce, but only comprise a third of the total contribution to the economy.
We think there is a much larger portion of SMEs that can take advantage of the capital markets,” Sicat said.
Currently, he said that two-thirds of corporate fund sources still come from bank lending and the reminder is funded through the sale of stocks and bonds in the capital markets.
But the capital markets are growing at a fast pace too, Sicat said, citing the 45 percent to 50 percent yearly growth in online stock trading accounts, giving rise to a much larger market that can accommodate more firms wanting to list on the PSE.
“More and more investors are trying to participate in online systems, and it’s growing about 45 percent to 50 percent per annum. And the SMEs can take advantage of this to raise money to grow their businesses,” Sicat said.
“We’re growing out a lot of programs for SMEs to consider the stock exchange as a funding source. The first is the mentoring system,” Sicat said, citing PSE’s partnership with universities and communities aside from PCCI.
“We’re continuously talking to them [SMEs], and a lot are curious. I think we still need to talk to them more before we can see [more]listings taking place,” he added.
Sicat said encouraging SMEs to list on the PSE and raise funds from the public will help in the government’s drive to push for inclusive growth in the country.
According to PSE rules on listing on the SME board, companies must have an authorized capital stock of P100 million or more, of which a minimum of 25 percent must be subscribed and fully paid. PSE also checks the companies’ track record and five-year business plan.
Listing applicants must also comply with stringent lock-up requirements, under which the shares of existing stockholders who own at least 10 percent of the issued and outstanding shares of the company will be locked up for a period of two years from listing, and the shareholders will be prohibited from selling or disposing the securities during the two-year lock-up period.
Among the successful SME listings on the PSE were those of DoubleDragon Properties Corp., Xurpas Inc., and Golden Haven Memorial Park Inc.
Other SMEs seeking to list on the stock exchange are Audiowav Media Inc. (P2.6 billion) and Xeleb Technologies Inc. (P800 million), among others.