PSE steps up effort to attract more IPOs

The Phillippine Stock Exchange (PSE) will invite profitable corporations, including oil and utility firms, to list their shares in the bourse in line with efforts to promote more initial public offerings (IPOs) and boost trading activity.

In a press briefing yesterday, PSE president Cayetano Paderanga said exchange officials would visit two to five corporations this year to try to convince them to offer their shares to the public as part of continuing efforts to restore investor interest in the equities market.

"We’re hoping to get more listings in the second half. We want something to spark the market. If we can get one or two companies to list, that’s a sign of confidence that should convince other firms to come in and list," Paderanga said.

Despite the mandatory listing requirement for energy or oil companies, they were able to delay their IPOs, 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, which took place on in February 2001.

Among the oil firms operating in the country, only Petron Corp. offered its shares at the PSE with the listing of 20 percent of its outstanding capital stock in 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.

This year, no company has so far listed. In 2003, five companies were listed at the exchange. These included Supercity Realty Development Corp., Transpacific Broadcast Group International, Cashrounds Inc., Makati Finance Corp., and the PSE.

Paderanga stressed, however, that the exchange has other sources of income even if it fails to convince these companies to list.

The PSE reported a P2.32-million first quarter net income this year, up by 30.34 percent from the previous year’s level of P1.78 million. Operating revenues grew 47 percent to P28.06 million, mainly due to higher membership-related income of P6.4 million or 29.95 percent of total revenues.

The increase in revenues was also attributed to the re-imposition in early 2004 of transaction fees.

Non-operating income amounted to P17.53 million or 62.47 percent of total revenues, which was 17.12 percent higher than in the same period last year, as a result of a more organized investment mix that took advantage of optimum yields.

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.

She has urged the PSE and the 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 address 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 Board of Investments (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 stockholders to list at the PSE in line with efforts to provide the public with more investment choices.