PSE eyes raising IPO allocation cap for small investors

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PSE eyes raising IPO allocation cap for small investors


The Philippine Stock Exchange proposes increasing the maximum amount of investment under its LSI program from P25,000 to P100,000 as IPOs are becoming larger

MANILA, Philippines – To encourage more small investors to participate in the market, the Philippine Stock Exchange (PSE) is looking to raise the maximum initial public offering (IPO) allocation for local small investors to P100,000 or any amount appropriate on a case-by-case basis.

“The exchange believes that the maximum allowable investment under its local small investor (LSI) program needs to be updated as well as to be indexed against the increasing offer size and investing capacity of investors,” the PSE said in a memorandum posted on its website on Tuesday, December 20.

The PSE originally introduced the LSI as a mechanism to allow more small investors to participate in IPOs. It initially capped the allowable investment per investor under this program at P25,000.

The local bourse noted, however, that “the offering size of IPOs has grown on average and the number of IPOs beyond P1 billion has been increasing.”

“As the size of the offerings increase, the required number of investors for the entire 10% allocation to be fully taken up also increases,” it added. 

“The Exchange proposes to allow a maximum investment per LSI that is applicable to the offer size. By indexing the maximum to the offer size, we hope to increase the total take-up of the LSI allocation.”

The proposed amendment sets the new allocation for LSIs to at least 10% of the entire IPO, which shall be offered only after the effectivity of the registration statement and during the formal offer period with a discount of 10% for the final offer price.

The bourse defined LSIs as those “willing to subscribe to a minimum board lot and whose subscription does not exceed P100,000 or such amount that may be allowed by the Exchange.”

The PSE also said in its memorandum that concerned stakeholders may submit their comments on the proposed amendment on or before December 29.

During the recent IPO of Pilipinas Shell Petroleum Corporation, the company also sought regulatory approval to increase the maximum allowable subscription of LSIs to P100,000 each, as its maximum offering represented the country’s biggest ever stock listing. –

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