Sun Life stocks surge 35%

Canadian insurance giant Sun Life successfully wrapped up yesterday its initial public offering (IPO) at the Philippine Stock Exchange with its shares surging 35.25 percent to close at P470, way above its offer price of P348.035 per share.

Trading of Sun Life Financial Services (symbol:SLC), the new parent entity created by the company's demutualization, was particularly buoyant in the Philippines -- one of only four stock exchanges where the IPO was simultaneously held -- as the stock went on to post the second highest gain among all issues, its price trading between P450 to P470 per share.

At the New York Stock Exchange, Sun Life closed at the equivalent of P380. There were no available reports of how the stock ended at the Toronto Stock Exchange and the London Stock Exchange.

Sun Life is the second foreign company to list at the PSE following the similar demutualization of its Canadian insurance colleague Manufacturers Life (Manulife) in September last year and more significantly, the first attempt this year by any company -- local or global -- to test the Philippine equities market.

Yves Laneuville, chairman of the board of local subsidiary Sun Life of Canada (Philippines)Inc., said they were "not a bit bothered " by the weakness of the local stock market along with the numerous controversials involving the market players and regulators.

"This (IPO) shows our continuing commitment to the Philippines and the Asia Pacific region," he said. Sun Life has a significant base of over 193,000 customers in the Philippines, more than their counterparts in Hong Kong and Indonesia where Canada's biggest insurer also operates. Its Philippine operations contributed around four percent of the company's total worldwide income last year.

Sun Life (Philippines) president Esther Tan added that they are exploring other management opportunities in the country, including the company's eventual expansion into an integrated financial services firm to include other aspects of fund management that are already being provided by its parent company: mutual fund, pension and retirement fund, non-life insurance, health insurance, brokerage as well as banking.

In fact in two week's time, Sun Life Philippines will launch a family of mutual fund products collectively called the Sun Life Prosperity Fund. Divided into three components from which an investor -- who can either be a policyholder or an outsider -- can choose from, the Fund will be handled by a separate unit, Sun Life Asset Management with an initial capitalization of P300 million.

A mutual fund is a pool of money handled by professional fund managers to invest in a diversified portfolio of stocks, bonds (government securities, corporate bonds) or other forms of securities deemed to generate the highest possible rate of return to the investors.

Tan said for a minimum of P10,000, a Fund investors can select from among three specific investment types: a bond fund (investing solely in bonds), an equities fund (stock investments) and a balanced fund (a mix of bonds and stocks). The company requires the investor to hold on or lock up their investments for at least five years although he can freely switch fund choices at any time.

At present, there are about 16 mutual fund companies in the Philippines, most of which are subsidiaries or affiliates of top financial institutions such as the GSIS. PhilamLife, All AsiaCapital and Far East Bank.

Based on their 1999 performance, the mutual fund companies did relatively well with a number of them yielding double-digit annual rate of return on investments.