By Zinnia B. Dela Peña
The Philippine Star 12/07/2004
Bullish on the improving prospects of the country, the Philippine Stock Exchange (PSE) is eyeing at least eight companies to list next year headed by leading broadcasting firm GMA Network Inc. and the Ayala-led water utility firm Manila Water Co. Inc.
PSE president Francis Lim said the exchange is stepping up efforts to lure more initial public offerings in line with efforts to boost trading activity.
"We are targeting eight companies next year. This is a very tall order but doable. We just need to have guts and will to push harder for more listing," Lim said.
Lim said he would propose to give a 20 percent discount on listing firms to promote more IPOs. The proposal, however, has yet to be presented to the board for its approval.
GMA Network Inc., which has already tapped ATR Kim-Eng Capital Partners Inc. as its financial advisor, and Manila Water are slated to list in the exchange in the first quarter next year. Manila Water, on the other hand, has appointed BPI Securities Corp. and ING Barings as financial advisers for the proposed issue.
Apart from GMA and Manila Water, other companies being eyed to offer their shares to the public are Global Mirant Philippines Corp., a joint venture venture between US firm Mirant Corp. and Global Business Holdings Inc. of the the Metropolitan Bank & Trust Co., the Lopez-owned First Generation Holdings Corp., and a rural bank.
So far only two companies were listed in the PSE, namely Petroenergy Resources Corp. which was listed by way of introduction and medium-sized International Exchange Bank, which just concluded its IPO.
Lim said the exchange is bent on seeing the listing of power firms, telecommunications firms and entities registered with the Board of Investments. The move is part of continuing efforts to restore investor interest in the equities market.
Despite the mandatory listing requirement for energy or oil companies, they were able to delay their listing, citing poor market conditions.
The oil deregulation law requires oil firms to offer at least 10 percent of their outstanding shares to the public three years from the effectivity of the law or in February 2001.
Among the oil firms operating in the country, only Petron Corp. made its debut at the PSE with the listing of 20 percent of its outstanding capital stockin 1994.
Caltex Philippines Inc. and Pilipinas Shell Petroleum Corp. are expected to sell their shares to the public this year to comply with the oil deregulation law and avoid sanctions.
Once dubbed as a get-rich-quick investment option, an IPO is a means of raising funds for expansion and capital, employed by companies as a cheaper alternative to the more expensive debt instruments such as bonds and bank loans.
An IPO is done by selling a portion of the company’s shares of stock at a price based on its book value or on its projected earnings for the year. These shares are then listed with the PSE so that stockholders and investors may trade the issue. Of the 237 firms listed in the exchange, only 100 are actively traded.
President Arroyo herself underscored the need for the private sector to come up with its program to improve the stockmarket now that the government has delivered the necessary legislations on documentary stamp tax and securitization.
Mrs. Arroyo has urged the PSE and Securities and Exchange Commission (SEC) to broaden their educational campaign to further encourage investors to take up equity investments besides savings in banks or being lured by pyramiding scams.
Both the SEC and PSE agreed to implement a two-pronged program to attack both the supply and demand side of the market. This includes attracting more listing of government and private firms and encouraging participation by domestic investors to include overseas Filipino workers.
Entities registered with the BOI and those borrowing money from government financial institutions such as the Development Bank of the Philippines will also be encouraged to offer their shares to the public. The SEC has previously approached the BOI on the matter but the latter had some reservations on mandating listing of all registered enterprises.
The SEC has also urged the country’s top 5,000 corporations and SEC-registered entities with P50 million in assets and at least 100 million stockholders to list at the PSE in line with efforts to provide the public with more investment choices. Out of the 200,000 corporations registered with the SEC, only 237 are listed. And of the 237, only 100 are actively traded.
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