The Philippine Stock Exchange said yesterday companies wanting to tap the stock market for the first time can apply for a share sale with a minimum float of 15 percent of the capital stock, provided the sale plan meets the minimum threshold of P5 billion.
They also must commit to making a follow-on offering (FOO) in the next two to three years to be able to meet the required 20 percent public float of listed companies, the PSE said.
Ramon Monzon, PSE president and chief executive officer (CEO), said this is an interim measure the bourse adopted with the approval of the Securities and Exchange Commission (SEC).
This measure, subject to a review after two years, seeks to address the stock exchange’s current liquidity problem.
Monzon said the option is available under its PSE Listings Assistance for New Entrants (LANE).
“With the liquidity problems we’re having in the market now, companies are having a hard time deciding on an IPO because of their inability, or fear that they cannot meet the 20 percent public float,” Monzon said on the sidelines of the PSE’s InvestPH 2025 investors conference, held in partner-ship with Bloomberg.
Thus, Monzon said, the public float was reduced to 15 percent on the condition that a follow-on offering be made to satisfy the requirements.
“Actually, we don’t advertise it because it might make the underwriters lazy,” he said, adding, “(But) when we talk to companies that are about to do an IPO, we tell them about this.”
Monzon said the measure eliminates the usual practice of requesting regulatory relief from the SEC, to be exempt from the mandatory 20 percent public float rule for an IPO.
Monzon said the companies must then comply with the two- to three-year window for the FOO or face penalties for dragging their feet.
Monzon said the rule will initially run for a two-year transition period.
“And if it doesn’t work, we’ll extend it for another two years,” he said.
Monzon said the PSE initially worked on the rule when Citicore Renewable Energy Corp. (CREC) was hesitating to proceed with its IPO last year. Citicore eventually raised P5.3 billion and was listed in June last year.
“But what happened was CREC attracted Mobilist,” Mozon said, referring to the United Kingdom government’s flagship program that supports infrastructure development and green transmission.
The measure seeks to address the low fund-raising activity turnout in the PSE, which was recorded at P79 billion last year. This year, the PSE aims to attract P120 billion worth of fund-raising activity.
Currently, Top Line Business Development Corp. is in the process of completing its P733.1 million IPO later this month.
Meanwhile, Maynilad Water Services Co. Inc. has also filed for an IPO that can tentatively raise for the company as much as P49.1 billion by mid-year.
“We are working on the listing by way of introduction of PNB Holdings. Of course, the GCash is also one. Some have talked to us, but we are still waiting for the HANN Resorts. I think they are still in the market. We have a few in the pipeline,” Monzon said.
Juan Paolo Colet, managing director at China Bank Capital Corp., said the new rule granting public float flexibility “may factor into the decision-making of certain IPO candidates, particularly companies who find it challenging to meet the 20 threshold.”
“Perhaps this will finally persuade GCash to list on the PSE this year,” he said.
Globe Fintech Innovations Inc., also known as Mynt and owner of the e-wallet GCash, was asking for relief from the SEC on the 20 percent public float rule. On Monday, Bloomberg reported that it wants to do a 10-15 percent float for a valuation of at least $8 billion.
Colet, however, stressed that the public float requirement is not the only consideration for companies planning an IPO.
“They also look at investor sentiment, market liquidity, listing costs, and regulatory obligations, which are in turn tied to other factors. So there is still a lot more that can be done to reinvigorate our stock market,” he said.
