Bourse turns more bullish on capital-raising target

THE PHILIPPINE Stock Exchange, Inc. (PSE) has turned more optimistic of reaching its capital-raising target for the year, as more issuers pull the trigger on fund-raising plans in the face of the local equities market's robust performance.

PSE President and Chief Executive Officer Hans B. Sicat told reporters two to three more initial public offerings (IPO) may happen over the rest of the year, including Pilipinas Shell Petroleum Corp.'s long awaited maiden share sale.


"The calendar is quite busy this second half and since we had the Cemex [Holdings Philippines, Inc.] listing last week, I think the interest level has increased. More importantly, volumes on the exchange have been increasing," Mr. Sicat said on the sidelines of the listing ceremony for DoubleDragon Properties, Inc.'s P10 billion worth of preferred shares.

Cemex raised P25.13 billion from a first-time equity offer that was the third-largest IPO in the Philippines after Robinsons Retail Holdings, Inc.'s P28.11 billion in 2013 and SM Investments Corp.'s P26.25 billion in 2005.

The IPO drought ended in late June with the P778.20-million offering of billionaire Manuel B. Villar's Golden Haven Memorial Park, Inc.

The PSE had signaled in recent months that reaching the P200-billion capital-raising goal may be a tall order.

However, the bourse is now singing a different tune with the PSE index -- a barometer of investor confidence -- up 15.43%, recovering from a turbulent start that saw the bellwether index plunge by as much as 12.5% in January.

"If everything in our pipeline actually materializes, we'll end up meeting that P200-billion target. It's a timing issue, among others," Mr. Sicat said.


The robust stock market has prompted Pilipinas Shell, a unit of Royal Dutch Shell Plc., to conduct its much delayed IPO that will generate up to P29.70 billion in proceeds, according to a prospectus filed with the Securities and Exchange Commission on July 25.

"We've been very excited about that for many years," Mr. Sicat said.

"Based on the signals, they want to do it this year."

The company is required to sell at least 10% of its common stock through a public offering three years after Republic Act No. 8479 or the Downstream Oil Industry Deregulation Act of 1998 became effective.


"Interestingly, I think deals can get done in this market. I expect interest rates to remain benign and Philippine growth to continue. Domestic liquidity is still strong and foreign funds have been slowly coming back to the Philippines," Reginaldo Anthony B. Cariaso, chief operating officer of BPI Capital Corp. which is the domestic lead underwriter and book runner of Pilipinas Shell's IPO, said in a mobile phone message.

Asked to comment on companies that have deferred their fund-raising plans, Mr. Sicat replied: "I think that the volumes on the exchange kind of being robust gave bankers and lawyers a lot of impetus to say it's a good time to raise money because valuations in the Philippine and investor interest is quite high so maybe it's a tipping point for some of the guys sitting on the fence."


Integrated real estate and construction firms D.M. Wenceslao & Associates, Inc. and Datem, Inc. had secured the necessary regulatory approvals, but shelved their IPO plans last year in the face of adverse market conditions.

The SEC has approved Philippine Primark Properties, Inc.'s maiden share sale.

Three more companies -- TVI Resource Development (Philippines), Inc., Pointwest Technologies Corp., and Green Power Panay Philippine, Inc. -- have pending IPO applications.

Source: Business World Online