Philippines faces dearth of IPO

MANILA, Philippines — The Philippine stock market is facing a dearth of initial public offerings (IPO) as hopes for a stronger market recovery have fizzled out. 

Companies previously planning to brave the market in the early part of the year have now adopted a wait-and-see stance, traders said. 

But the Philippine Stock Exchange, the operator of the local bourse, is keeping its fingers crossed the situation will change in the months to come. 

It remains optimistic it would see more listings this year compared to 2018 which only welcomed one newcomer, D.M. Wenceslao. 

“The interest is still there. They are just waiting,” PSE chief operating officer Roel Refran said.

Piper Chaucer Tan, research associate at Philstocks Financials, said aspiring IPO companies are not yet confident enough to list in the market at this time.

“This may be the sign that the investor and aspiring IPO companies are not yet confident enough on the sentiment and on our market even though it has created a rally at the start of 2019. Also adding to this is that some analysts are still cautiously positive and are still not too confident that we will achieve the 9,000 level that we achieved in 2018,” Tan said.

He said that as of the moment, the index is having a hard time sustaining the crucial 8,000 level. 

“Investors and IPO companies are also mindful of the economic headwinds such as inflation and the widening of current account of which greatly accounts for the movement of peso. This affects the foreign fund flow here in our local markets going forward. Oil is still a major factor in inflation and corporate earnings right now, most especially to the index member stocks, are somehow not attractive to investors,” Tan said.

He said that even Dennis Uy’s Philippine Resorts Group Holdings Inc. also deferred a planned follow on offer that was targeted to be implemented in February.

PH Resorts had the approval to sell up to 1.786 billion in common shares, with an additional of up to 267.95 million shares. 

“PH Resorts also deferred its FOO due to the market conditions since they know that the market right now is very volatile and overall sentiment is slowly changing from bullish to bearish,” Tan said.

For the IPOs, at least four companies are expected to brave the market this year after postponing their plans to go public in 2018.

These include Campos family-owned Del Monte Philippines Inc. (DMPI) which earlier scheduled its planned IPO in June 2018.

DMPI had already obtained the approval of the PSE, the Securities and Exchange Commission (SEC) and the shareholders for the planned IPO which would supposedly raise as much as P17.552 billion in net proceeds.

However, Del Monte Pacific Limited (DMPL), the parent firm, said DMPI has decided to defer the IPO because of prevailing market conditions at the time.

The company had planned to sell 587.437 million secondary shares at a price of up to P29.88 per share.

Another company that also postponed a planned offering last year is consumer electronics manufacturing giant Cal-Comp Technology (Philippines) Inc. The company was supposed to embark on a P6.77 billion IPO in the second half of 2018. 

The company is member of NKG, the largest Taiwanese investor in the Philippines.

Another company which did not push through with its IPO this year is Fruitas Holdings Inc. (FHI), the food and beverage company. It is behind the popular Fruitas brand and it had planned to do a roughly P2 billion IPO in the latter part of 2018.

FHI is the market leader in the Philippine food cart business. At present, it carries well-known brands such as Fruitas Fresh From Babot’s Farm, Buko Ni Fruitas, Fruitas Ice Candy, De Original Jamaican Pattie and Juice Bar, Juice Avenue, The Mango Farm, Buko Loco, Johnn Lemon. Black Pearl, Shou, Friends Fries, and Halo-Halo Islands.

AirAsia Philippines also said its $250 million IPO would be pushed back to mid-2019 after the low cost carrier took a hit from the six-month closure of Boracay from April to October 2018.

Thus, as a result, the stock market only saw one IPO in 2018 that of D.M. Wenceslao’s P8.1 billion IPO last June.