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The Philippine Stock Exchange is likely to reach a new all-time high in capital raising this 2021, as more companies tap the equities market amid the coronavirus pandemic.
At a press briefing on Friday, July 2, PSE president and chief executive officer Ramon Monzon said that from January to June, the local bourse already raised P122.5 billion through initial public offerings (IPOs), follow-on offerings, and private placements.
The year-to-date figure already surpassed the P103.8 billion raised in 2020.
The PSE’s highest capital raising amount, excluding sale of secondary shares, was registered in 2012 at P219 billion.
With the planned IPOs this year, the amount of capital raised this year could reach P249.5 billion, exceeding the record in 2012.
Monzon said that the pandemic may have pushed companies to go public, as debt financing became difficult due to banks’ tightening rules.
The Bangko Sentral ng Pilipinas has set interest rates to an all-time low to encourage lending. But while banks were awash in cash, they still tightened lending standards due to the pandemic-induced recession.
“There’s a silver lining in every cloud. Because of the pandemic, I think debt financing, while very cheap, became very, very difficult,” Monzon said.
“Banks had to tighten their lending standards, plus I guess because of the economic difficulties [the companies] had to borrow and I guess they were reaching their credit limits. But their need for capital continues so they had to go to the equities market,” he added.
Companies that went public amid the pandemic like Monde Nissin and Converge used part of their raised capital to pay obligations, other than expansion-related expenses.
Del Monte Philippines is set to go public, so far seeking to raise P38.3 billion.
Monzon, however, clarified that the strictness of banks was only one factor. He noted that the approval of real estate investment trust (REIT) and relaxed listing rules and lock-in period also helped encourage companies to go public.
There are currently three upcoming REIT offerings: Filinvest, Robinsons Land, and Megaworld.
Megaworld aims to raise a whopping P27.3 billion, making it the largest REIT IPO to date.
Robinsons Land is planning to raise P26.6 billion, while Filinvest is eyeing P14.8 billion. – Rappler.com
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