AG Finance eyes P150-M IPO

MANILA, Philippines - A microfinance company is braving the volatile stock market as it is set to become the fourth  firm to go public this year.

In a memorandum, the Philippine Stock Exchange (PSE) said its board “approved the application of AG Finance Inc. for the initial listing of up to 261.82 million common shares, with a par value of P1 per share.”

AG Finance can sell up to 68.07 million common shares at an offer price of P1.91 to P2.20 piece. This will allow the company to raise P130.02 million to P149.76 million in fresh capital.

Final pricing is scheduled on July 26. Offer period will run from July 30 to Aug. 5, which will be followed by its listing in the PSE’s main board on Aug. 13.

AG Finance tapped BDO Capital and Investments Corp. as the issue manager and sole underwriter.

Early this month, the Securities and Exchange Commission approved the public listing of AG Finance, barely a month after capital markets experienced volatile swings.

On June 13, the main stock index plunged 6.75 percent, marking the deepest single-day drop of the bellwether index since sinking a record 12.27 percent on Oct. 27, 2008 at the height of Lehman Brothers’ bankruptcy that resulted in the global financial crisis.

The recent volatility was caused by foreign funds exiting from emerging markets in hopes of higher yields in advanced economies, prompting the deferral of Robinsons Retail Holdings Inc.’s P40-billion share sale and Travellers Hotel Group Inc.’s P42-billion IPO.

Given AG Finance’s decision to brave the financial markets, it will be the fourth company to enter the local bourse this year. Three firms have so far debuted in the local exchange: Philippine Business Bank, Asia United Bank and Del Monte Pacific Ltd.

“The net proceeds that will be received from the IPO will be used to finance the company’s professional and skilled overseas Filipino workers’ (OFW) loan portfolio expansion program,” AG Finance said in its regulatory filing.

It will also pay P37 million in existing loans with China Banking Corp. that carries an interest rate of six percent per annum.

AG Finance said it will spend P47 million for OFW loan portfolio expansion and P53 million for loans to professional skilled workers.

AG Finance, which was incorporated in 2001, is into the microfinance and consumer loans industry targeting Filipinos here and abroad. It provides short term, unsecured credit facilities to permanent rank-and-file employees of medium-sized Philippine firms.