Two to three initial public offerings likely next year

THE Philippine Stock Exchange (PSE) could see two to three initial public offerings (IPOs) next year, the top official of an investment house said.

“Realistically, I see about two to three IPOs,” BDO Capital and Investment Corp. President Eduardo V. Francisco told BusinessWorld in a recent roundtable.   

“Five IPOs are already optimistic because the first half will be muted if rates are still high. If the rates don’t go down, no one would do an IPO… Those might all come in the second half of next year,” Mr. Francisco added.   

Three companies conducted IPOs this year, namely Alternergy Holdings Corp. in March, Upson International Corp. in April, and Repower Energy Development Corp. in July.

This is well below the PSE’s target of 14 IPOs this year amid unfavorable market conditions.

The PSE index closed at 5,989.27 on Nov. 3, down by 577.12 points or 8.79% from its Dec. 29 finish of 6,566.39.

Persistently elevated inflation has caused the Bangko Sentral ng Pilipinas (BSP) to keep its benchmark rates high.

In its first policy adjustment since March, the BSP on Oct. 26 raised its key rate by 25 basis points (bps) to a 16-year high of 6.5% in an “urgent” move to anchor inflation expectations.

Philippine headline inflation accelerated for a second straight month to 6.1% in September. This brought the nine-month average to 6.6%, still above the BSP’s 5.8% forecast and 2-4% target for the year.

Mr. Francisco said possible IPOs by next year include Maynilad Water Services, Inc., Citicore Renewable Energy Corp., and the local subsidiary of Australian-Canadian mining firm OceanaGold Corp. 

“For Citicore, it has a chance because there is demand from institutional investors. There are investors who might invest there regardless of the yield because they are looking at long-term pay rather than dividend yield,” he said.

“Maynilad’s IPO has a chance. It is required by law. For OceanaGold, it is also required by law and also they are very profitable, so there is a chance that it would push through,” he added.

Maynilad has to list on the local bourse by 2026 as part of the terms of its franchise and revised concession agreement with the government, Metro Pacific Investments Corp. (MPIC) Chairman, President, and Chief Executive Officer Manuel V. Pangilinan said in September.

Maynilad is managed by a joint venture among MPIC, DMCI Holdings, Inc., and Marubeni Corp. The water concessionaire provides water and wastewater service for Metro Manila’s west zone and nearby areas. 

OceanaGold is also mandated to list its local unit, OceanaGold Philippines, Inc. (OGPI), on the PSE under its 25-year Financial or Technical Assistance Agreement (FTAA) with the government. 

OGPI operates the Didipio gold and copper mine in Nueva Vizcaya. OceanaGold announced in July 2021 that its FTAA with the government had been renewed. 

Meanwhile, Citicore Renewable Energy President and Chief Executive Officer Oliver Y. Tan said in September that the company is aiming to go public by next year and is already preparing its registration statement. — Revin Mikhael D. Ochave