More firms to tap bourse to raise capital

MANILA, Philippines - More companies are seen raising capital through offerings in the local bourse and by tapping the debt markets as prospects for the Philippine economy remain rosy for investors.

Ed Francisco, president of BDO Capital & Investment Corp., told The STAR his firm has been talking recently  to a couple of family-owned corporations interested in conducting an initial public offering in the local stock exchange.

“For IPOs, there are still a lot of companies who can do it if they want to. The only dilemma is if they should do it now or not,” said Francisco, whose firm was one of the underwriters during the IPOs of DoubleDragon Properties Corp. and Century Pacific Food.

“Generally, I’ve had meetings where I had to present to families. They are that interested to the point that they would convene their family board because this will have a big implication for the family… They want to know more about tapping the capital markets,” he continued.

Filipino IPOs, he explained, may be classified into two types: one is done to facilitate easier transfer of ownership, and the other is for raising capital.

Francisco recounted that there is still a lot of interest in listing at the Philippine Stock Exchange especially with the strong Philippine economic growth, and the country’s strong macroeconomic fundamentals.

The Philippine economy expanded by a lower-than-expected 5.7 percent in the first quarter, but the government still sees this growing by 6.5 to 7.5 percent this year. Last year, the economy grew by a stellar 7.2 percent.

The PSE has a P200-billion target capital to be raised this year, banking on the fast-growing companies to attract more companies to start tapping the capital markets now. 

On the debt side, Francisco said there is also a lot of interest among local firms especially for banks in issuing retail bonds to raised up more capital for their expansion needs.

“I think in the next few months, you will see a flurry of banks’ issuance… as they retire their non-compliant instruments and issue those compliant with Basel III,” Francisco explained.

Universal and commercial banks, starting this year, have been required to abide by the Basel III rules, as mandated by the Bangko Sentral ng Pilipinas. In order to improve their capital quality, banks have retired their non-compliant securities and modified them to comply with the new measures.

“With all these, the market is seen becoming deeper because relatively you have more choices for investing in – you’re leaving more choices to the investors,” Francisco said.