Quick Take: Prime Infra's IPO and 1 more market update
Bangko Sentral ng Pilipinas (BSP) [link] Governor Felipe Medalla said that the BSP was “literally bribing banks to subsidize small transactions” by offering to cut the reserve requirement in exchange for a blanket waiver on bank-to-bank transfers for small transactions. Mr. Medalla said that the goal is to lower the reserve requirement to at least 10% (down from 12% where it is today), and that it would offer this as a form of “cost-sharing system” that could get banks on board with doing away with fees for small transactions.
MB Quick Take: Take a look at the recent FY22 annual and Q1 quarterly earnings for banks. They’re more profitable than they’ve ever been. They don’t need an additional P200 billion in capital made available for loans just to waive predatory transaction fees on small accounts. The BSP is the banking sector’s regulator, and it could, if it wanted to, prohibit banks from charging these fees. The BSP does not need to negotiate with the banking sector for something that it can do unilaterally. The BSP clearly wants to cut the RRR (which it has wanted to do for years), and is trying to find a cool/populist reason to do so at a time when dumping liquidity into the market could make inflation worse.
Prime Infrastructure Capital [PFR pre-SEC] [link] still pushing for a Q3/23 IPO, according to BDO Capital, one of the joint underwriters on the deal. Enrique Razon is looking to raise over P33 billion through the all-primary listing, with the majority of the proceeds going toward the Terra Solar power facility that PFR is building through a joint venture with Leandro Leviste's SP New Energy [SPNEC 1.40; 89% avgVol].
MB Quick Take: Despite continued market weakness, PFR is raising the size and price of its offering from what it was considering back in mid-2022 before inflation and market volatility killed those plans. This was going to be the daddy IPO of the season, right up until SM Prime [SMPH 33.00 1.8%; 101% avgVol] started talking about a potential mall REIT IPO in the P55 billion range. I’m not really that much of a size king; for me, the value is in the primary/secondary split and the potential for the proceeds to be transformative. Here, it’s definitely caught my eye that Mr. Razon is getting even more aggressive on both offer size and price. Still a long way to go, though. Lots can change, and Mr. Razon has shown that he’s willing to pack up and go home if the conditions aren’t right.
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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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