Sees listings pushed back to H2
TWO small and medium enterprises (SMEs) have canceled plans for an initial public offering (IPO) due to global uncertainty that clouds market prospects worldwide, an underwriter said.
“They canceled already. Primark did a private placement instead before the elections, for an undisclosed amount. Philstocks was postponed due to the volatility last elections,” Leonardo Arguelles, managing director of Unicapital Inc., said in a phone interview.
“They were waiting for a chance, but it was a volatile market. Even in 2017, with the uncertainties of a Trump administration and the change in geopolitical winds, they don’t want to risk launching their IPOs,” he added.
Primark and Philstocks intended to raise a combined P1.4 billion from the market. Primark wanted to raise P1.2 billion to fund property development projects, while brokerage Philstocks wanted to have P185.89 million for expansion.
The companies were supposed to be listed on the Small and Medium Emerging Board of the Philippine Stock Exchange.
As an underwriter with deals worth P2 billion under its belt, Unicapital is preparing two other IPOs this year to be listed on the SME Board—a utility firm a financial technology company, Arguelles said.
Aguelles expects the volatility to continue in early 2017, but he said this will only push back the planned IPO listings into the second half of the year.
“There are a lot of IPOs in the pipeline in the first quarter of the year, but I think we will see the surge in IPOs by the second half,” Arguelles said.
“Uncertainties will be carried over to 2017, mainly because the US is not yet clear with its policy direction as well as the US interest rate hikes set for the year. Investors are likely to employ risk-off trading,” he added.
However, Arguelles expects the Philippine market to fare better than its regional peers due to the accelerated infrastructure spending promised by the Duterte administration, on top of the economy’s strong economic fundamentals, such as robust consumer spending, OFW remittances and the revenue stream from the business process outsourcing sector.