PSE sets P120-billion capital target

By Revin Mikhael D. Ochave, Reporter

THE Philippine Stock Exchange (PSE) is aiming to raise P120 billion in capital next year as it anticipates increased market activity.

“This year, we have P79 billion in capital raising. Next year, I think we can do about P120 billion in capital raising, about a 50% increase. These include follow-on offering (FOO), stock rights offering, and private placements,” PSE President Ramon S. Monzon told reporters on the sidelines of a forum in Makati City on Thursday.

Last month, Mr. Monzon said the PSE expects to have six initial public offerings (IPO) and to raise up to P150 billion in capital for 2025.

The PSE only had three IPOs this year, missing the market’s operator target of six. These were mining company OceanaGold (Philippines), Inc. as well as renewable energy companies Citicore Renewable Energy Corp., and NexGen Energy Corp.

The market operator also fell short of its goal to raise P175 billion in capital this year.

“We only had three IPOs — small ones. But we had big preferred FOOs,” Mr. Monzon said.

The PSE was supposed to have its fourth IPO this year with the public listing of Cebu-based fuel retailer Topline Business Development Corp. (Topline).

However, Topline announced on Nov. 18 that it opted to move its offer period to the first quarter of 2025 to accommodate institutional investors.

Mr. Monzon said there is some uncertainty next year as US President-elect Donald J. Trump assumes office on Jan. 20. Mr. Trump had vowed to implement higher tariffs on imports, conduct mass deportation of illegal immigrants and focus on domestic manufacturing.

“There is uncertainty. We don’t know what’s going to happen. (Mr. Trump plans to) deport the illegal immigrants. I think there are a few Filipino immigrants. If he does a massive importation, then our (overseas) remittances will drop. It’s a very important stabilizing factor for an economy,” he said.

“He’s also trying to penalize companies that go outside. Our information technology and business process management industry (IT-BPM) employs about 1.9 million employees. Those are the uncertainties that we don’t know what will happen,” he added.

The Philippines is one of US firms’ top destinations for outsourcing services.

An earlier report by the Center for Strategic and International Studies (CSIS) showed 395 US firms have invested $22.4 billion in the Philippines between 2003 and 2021, of which $7.8 billion or 35% went to the IT-BPM sector.

China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message that the PSE’s capital-raising target for 2025 is attainable.

“The PSE’s target is doable assuming market conditions are bullish for equity fundraising next year. For example, if SM Prime Holdings, Inc.’s real estate investment trust (REIT) and GCash will do their IPOs in the Philippines next year, then those two deals alone could easily raise P120 billion,” he said.

“At this point, the outlook for our stock market is very fluid given the anticipated challenges and opportunities from Trump 2.0, so the target may still change,” he added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that lower interest rates could help boost stock market activity.

“It is achievable amid better economic and market conditions, in view of possible further Federal Reserve rate cuts and local policy rate cuts that would reduce borrowing costs, increase demand for loans that would increase investments, create more jobs and more economic activities that would lead to more earnings of listed companies,” Mr. Ricafort said.

“If local stock market prices go up further in 2025, then that would make it more attractive for more share sales at the highest price possible, especially if those that deferred share sales would eventually push through,” he added.

Sy-led SM Prime’s REIT, Razon-led Prime Infrastructure Capital, Inc., Maynilad Water Services, Inc. and electronic wallet GCash are some of the big names said to be planning IPOs but with no definite timeline.

On Thursday, the bellwether PSE index dropped by 0.95% or 64.05 points to 6,638.54, while the broader all shares index retreated by 0.66% or 25.14 points to 3,734.94.

ACQUISITION
Meanwhile, Mr. Monzon said the PSE is hoping to finalize a move to acquire the Philippine Dealing System Holdings Corp. (PDS Group) before yearend.

“We’re still hoping. It’s just November. We still have a month to go. It is still a work in progress,” he said.

The PSE is looking to purchase up to 100% of the PDS, the operator of the Philippine Dealing & Exchange Corp., which caters to the fixed-income market by providing trading infrastructure.

Currently, the PSE has a 20.98% stake of the issued and outstanding capital stock of the PDS Group, while the Bankers Association of the Philippines members and institutions have a 21% stake.