SPNEC receives lukewarm welcome in jittery market debut

MANILA, Philippines — Solar Philippines Nueva Ecija Corp. (SPNEC) reversed a brutal sell-off in the morning trade to post modest gains during its market debut on Friday, highlighting the volatility that companies planning to go public could face amid lingering pandemic uncertainties.

From its initial public offering (IPO) price of P1 per share, SPNEC crashed to an intra-day low of 24% during its listing day, before paring those losses and finishing at P1.01 per share, up 1%.

The main index, which was also in the red during the morning trade, capped the week with 0.89% gains.

SPNEC's maiden share sale came a few days after the painful stock market debut of Medilines Distributors Inc., which collapsed 30% during its listing day. April Tan, head of research at COL Financial, believes investor concerns on Medilines’ lackluster IPO could have influenced SPNEC’s performance early in the day.

"As for SPNEC, probably due to worry following the weak performance of MEDIC," Tan said in a Viber message.

For Luis Limlingan of Regina Capital, SPNEC’s offer came at a time of renewed market volatility triggered by fresh pandemic threats. “It could have performed better but several events changed the economic landscape which were beyond the company's control,” Limlingan explained in a text message.

“These include and aren’t limited to: US (Consumer Price Index) hitting 30-year highs, acceleration of Fed to increase rates, and the first cases of Omicron to reach the Philippines,” he added.

SPNEC is a subsidiary of Solar Philippines, the largest solar energy provider in the country.

Days before going public, the renewable energy firm owned by the 28-year-old businessman Leandro Leviste announced that shares were oversubscribed twice, meaning investor demand for the stocks exceeded the size of the offering.

SPNEC was pegged to have raised P2.6 billion from the IPO, which will bankroll the completion of the company’s 500 megawatt solar power plant and fund the purchase of land intended for its expansion. The company made history as one of the first firms that Philippine Stock Exchange allowed to do an IPO and list without any operating history.

Similar to Medilines, the company went public without any stability fund to support it in case of a rout. PSE President and CEO Ramon Monzon last Wednesday said the local bourse operator is planning to mandate companies going public to have such funds.

For Limlingan, requiring stability fund would protect retail investors from big losses. "Priority should be given to safeguarding the interest of the investing public. In that regard, it does help then it would be a good plan," he said.

"Perhaps more studies as to how much should be allotted," he added.

But Tan said she is "not sure if it is a good idea to make the stability fund mandatory."

"It might make it more expensive for companies to list, discouraging them to list," she said.