PSE okays 15% float for firms going public
Companies that wish to list on the local bourse may offer only 15 percent of their shares to the public, or below the existing 20-percent minimum, as the Philippine Stock Exchange (PSE) moves to attract more listings amid tepid trading in the market.
PSE president and CEO Ramon Monzon told reporters in an interview on Wednesday that the Securities and Exchange Commission had already approved its proposal to reduce the minimum public float.
However, this is only for companies that will raise at least P5 billion from a stock market debut.
“When we talk to companies that want to do an IPO (initial public offering), we tell them about this [option],” Monzon said on the sidelines of the PSE’s InvestPH forum.
“What we’re doing basically is making it easier for companies to make their decision to do an IPO,” he added.
Should an IPO-bound company opt to offer 15 percent of its shares, it is required to conduct a follow-on offering within two to three years to meet the 20-percent minimum, Monzon said.
GCash debut
This comes amid talks that the PSE was willing to bend its rules to accommodate the much-awaited listing of Ayala-backed e-wallet platform GCash.
According to Monzon, GCash had said that offering 20 percent of its shares may be “too big for the market to absorb.”
But if GCash opts for this path for its IPO valued at as high as P95 billion, Monzon said that the company would not qualify for the 30-member PSE Index, which is composed of the biggest and most actively traded listed firms.
“You cannot be in the index if you’re below 20 percent. So it needs to be done step by step. Let’s get the IPO out of the way first,” he said.
While the PSE sees this as a way to encourage more companies to go public, a market analyst said lowering the minimum public float requirement may discourage market participation.
According to the analyst, the 20-percent minimum was considered a “global best practice.”
“They have to review … accommodating [this] situation is going back to what happened before—nobody will want to invest in stock markets,” the source said on condition of anonymity.
The analyst added that the PSE should instead find other ways to “get more people involved in the market.”
The person also argued that GCash offering 20 percent of its shares would not be too big for the market to handle, especially since it was a large company.
“It’s a very attractive company,” they added.
