PSE seen to post 1st entry in SME board this year

The first entry in the small and medium enterprise (SME) board of the Philippine Stock Exchange is likely to be listed this year while initial public offerings (IPOs) by bigger companies are taking a back seat until after the country’s political situation has stabilized, top PSE officials said yesterday.

PSE president Ramon T. Garcia said prospective issuers have indicated they prefer to pursue the listing of their shares after the national elections this May.

"They are waiting for the results of the elections when, hopefully, the political situation has stabilized and investors’ sentiment in the capital markets has improved," he said.

In the meantime, PSE general counsel Dennis Eala said SQL Wizard, a company engaged in information technology (IT), would likely distinguish itself both as the first IPO entry this year and the first under the SME board.

The SME board, the so-called third board at the PSE, was put up over a year ago to serve as a "nursery market" for young and small companies but with high potentials for growth. However, the economic difficulties and the negative image created on the stock market by the BW Resources trading scandal last year deterred the SMEs from going public.

To qualify for listing at the SME board, companies should have an authorized capital ranging from a minimum of P20 million to a maximum of P100 million; a paid-up capital of at least 25 percent; and at least a two-year record of positive net operating income, among others.

Before the establishment of the SME board, at least five firms have expressed interest in listing their shares but none actively pursued these plans.

Despite the tight economic environment in 2000, more companies listed their shares at the PSE compared to a year earlier. From only four in 1999, new listings last year reached seven: Sun Life Financial Services, Active Alliance Inc., Diversified Financial Network (dfnn.com), Macondary Plastics, Pancake House, Corro Coat and Globe Telecom’s Philippine Deposit Receipts (PDRs).

SQL Wizard is among the first batch of five prospective IPOs for this year. The others are property firm First Centro Inc., Primex Corp., another real estate company, telecom firm Radio Marine Network Inc. and Standard Insurance Co. Inc.

Except for First Centro, whose IPO would be possibly deferred due to its sale to the listed Alliance Global group, all other applications are still pending.

Based on its application, SQL intends to offer four million shares or 20 percent of its outstanding equity to the public to raise about P7 million for its expansion program.

Just recently, Highlands Prime Leisure Properties Inc., a property company that spun off from Belle Corp., said it was considering to list 10 percent of its shares by the third quarter of this year although the PSE said it has not yet received any application from this company.