At least 24 firms seen to undertake IPO this year

The Securities and Exchange Commission (SEC) is targeting at least 24 companies to list at the Philippine Stock Exchange (PSE) this year, more than twice the number of companies that had the courage to go public in 2001 despite the depressed market condition.

SEC Chairman Lilia R. Bautista told reporters that while the commission is not expecting a miraculous revival this year, there is enough reason to expect that the number of initial public offerings (IPOs) will double last year’s total of 11 companies or even more.

At the height of stock market boom, Bautista said the PSE was listing at least 30 new issues a year. Despite the depth of the slump in 2001, the market managed to attract more than 10 companies to list at the exchange.

"It should be at least twice that this year," Bautista said. "I think 24 is a reasonable target without necessarily over-estimating the market."

Although it would be difficult to predict how the market would behave in 2002, Bautista said the main reason for SEC’s optimism is that several oil companies are already set to go public and are only waiting for some indication that the market would improve in a more sustainable way.

There are at least two oil companies –Pilipinas Shell and Caltex Philippines – that have been planning to list at the PSE. Both companies have done their due diligence review and are only waiting for the market to improve.

Pilipinas Shell is set to list some P2.5 billion worth of shares at the exchange, an offering that could perk up the market back into life after almost four years of stupor.

However, with most companies adopting a wait-and-see mode and with no one wanting to make the first move, it could take a while before the market actually shows some signs of life despite all predictions of better economic prospects this year.

Despite the resilience exhibited in the economy in the past year, the increase in consumer spending and the often huge improvements in corporate sales, profits has been down especially among multinational firms, due mainly to the rising cost of raw materials as well as other operation-related expenses.

As a result, companies have been less than enthusiastic that the economic resilience and brisk consumer spending would translate to improvement in profits.

Thus far, the SEC has approved one rights offer scheduled this year. The commission approved the draft underwriting agreement between Ebecom Holdings and Asian Alliance Investment Corp. where Ebecom plans to offer 97,500,000 rights shares to its shareholders.

The rights offer would be on the basis of 11 rights shares for every one common share held at a subscription price of P1 rights payable upon full subscription.