March IPOs awaiting PSE approval will likely be delayed
I don’t have any hard news to support my belief that all of the IPOs of Bank of Commerce [BNCOM 12.50 pre-PSE], RASLAG Corp [ASLAG 2.00 pre-SEC], Balai Ni Fruitas [BALAI 0.75 pre-SEC], and CTS Global [CTS 1.00 pre-SEC] (the “March IPOs”) will be delayed, but reality, custom, and rumor have all conspired to make the likelihood of delay something worth talking about.
First, on the reality side of the ledger, we have the fact that only one of the March IPOs (BNCOM) has even had its offering approved by the SEC, which is only the first step in the process.
The rest (ASLAG, BALAI, CTS) are still just un-stamped applications. Additionally, some of the dates supplied by the IPO hopefuls in their applications to the SEC are either passing today (in that today was to be BNCOM’s and ASLAG’s pricing day) or are too near in time to be realistic given how far behind these applications are in the process.
So, while BNCOM and ASLAG had both planned to begin their offer periods on Monday next week, that just seems foolish if BNCOM is still awaiting PSE approval and ASLAG is not even through the SEC part of the process yet.
On the custom side of things, we have the PSE’s rather patriarchal approach to IPO scheduling that seems obsessed with spreading out potential offerings to prevent “saturation”.
We saw this most notably with the Citicore Energy REIT [CREIT 2.72 0.74%] IPO, which the PSE delayed for months due to what it perceived to be the glut of similar fixed-income offerings and similar industry offerings in the Solar Philippines NEC [SPNEC 1.84 unch] IPO that was scheduled for December.
Now, to finish off on the rumor side of things, we have the whisper wire saying that the PSE is pushing the underwriters to amend their boilerplate prospectus and underwriting agreement language, that this process is a condition precedent to moving forward on any of the next IPOs, and that this process has not been very smooth between the PSE and the underwriters.
Put that all together, and we have a situation where I don’t think it’s possible for the March IPOs to conduct four listings between March 23 and April 13.
MB BOTTOM-LINE
At this rate, I don’t think we’ll see any IPOs in March.
Let me be clear, though, that I think whatever the PSE is allegedly doing to force changes to the underwriting side of the issuances is probably quite important and worth the wait, considering the glaring loophole that DITO [DITO 5.91 3.75%] seemed to jump through when it casually called-off its stock rights offering at the last minute.
Based on the PSE’s anger toward DITO, and DITO’s underwriter for the issuance, Chinabank [CHIB 26.50 2.71%], it seemed inevitable that the PSE would be forced to act in some way to prevent companies from playing similar games with the market in the future. Still, the info I have on that is only rumor at this stage.
The PSE hasn’t released any public statements about what it is doing or the actual reforms that it is pushing, so for what feels like the millionth time I’ve said this, we’re just going to have to wait and see what the PSE will (eventually) do.
Zooming out a bit, I think that the PSE ought to aspire to be less of a bottleneck in the listing process, and should consider any time that it is mentioned in media stories to be a sign that something is not going according to plan.
It’s never good when infrastructure is in the news, and it feels like the PSE has become quite comfortable with being the center of attention in recent months.
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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
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