PRIVATE firms with small to medium market capitalization should list on the Philippine Stock Exchange (PSE) to reap the benefits of local and international recognition.
Leonardo Arguelles Jr., managing director of investment bank Unicapital Inc., said more Philippine firms should list publicly and raise funds in the stock market rather than tapping a bank loan. This would give a company more visibility for long-term growth.
“We have never been disappointed with IPOs. We’re very selective; we’re very strict with due diligence. The Juan dela Cruz of this world should be wealthy through stock exchange… This is how we will be able to compete in the global market place. Our goal is to bring companies to the stock exchange,” Arguelles said.
“That is what we’re trying to communicate with entrepreneurs. Budding entrepreneurs should consider listing on the stock exchange to accelerate their growth. The market will give the businessman [opportunities]to raise the money, and he can grow,” Arguelles added.
One way of listing shares is by way of formal introduction or initial public offering (IPO), in which the company formally offers shares to the public.
Other ways are “by way of introduction” where a company will list first on the exchange and sell shares in a “follow-on” offering within 10 months after listing. In “backdoor listing,” a firm wanting to go public buys a listed firm – usually a dormant or a shell company with no operations – then change its name and purpose before conducting a follow-on share sale.
Traditionally, Arguelles said Filipino firms are “afraid” to sell shares publicly. They prefer to simply book a loan for expansion and operations.
“Filipinos are afraid of IPOs. Either they are afraid of the shareholders, or they have yet to clean their books,” he said.
But with an improving stock market and the growth prospects of the economy, the Unicapital chief is pushing for more firms to go public.
Unicapital has done underwriting services for some successful IPOs from small, medium and enterprises (SME) to some of the major companies in the stock market.
Among its successful SME IPOs were DoubleDragon Properties Corp. and Xurpas Inc.
The company is underwriting some IPO hopefuls in the pipeline, including Italpinas Development Corp. (IDC) (P242 million), Philstocks Financial Inc. (P185.89 million), and Philippine Primark Properties Inc. (P1.2 billion).
Apart from the upcoming IPOs, Unicapital has been making “a lot” of underwriting deals for 2016, mostly consumer-related companies.
The PSE expects two to three more IPOs to cap the year with five listings from the usual nine to ten listings a year. The concluded IPOs are of Crown Asia Chemicals Corp. and SBS Philippines Corp.
So far, only Metro Retail Stores Group Inc.’s IPO for P4.037 billion has gotten both SEC and PSE approvals to go public this year. Other firms approved by the SEC but awaiting for PSE green light are IDC, Gweilo Corp. (P105 million), and Datem Inc. (P4.65-billion).
IPOs deferred for next year are D.M. Wenceslao & Associates Inc. (P21.7 billion), Green Power Panay Philippines Inc. (P290 million), Philstocks Financial, Philippine Primark, Pointwest Technologies Corp. (P2.09 billion), and Pilipinas Shell Petroleum Corp., among others.