Asia’s investment bankers, hoping to spice up a relatively quiet year,
are turning their eyes to a new source of deals: the Philippines.
The country’s stock exchange is
moving to raise the public float of companies listed on the bourse, whose
market capitalization—at $256.29 billion as of last Wednesday—is among the
lowest in the region.
By the end of the year, companies
listed on the exchange will be required to have a 10% minimum float. To reach
that level, the more than two dozen noncompliant companies would have to raise
equity of more than $2 billion in total in the next two months.
Those that fail to comply will be
suspended from trading on the exchange in January, before eventually being
delisted in a process that could take a year or longer.
“The whole point of the exercise
of being an exchange is that you would have enough supply [of shares],”
Philippine Stock Exchange President Hans Sicat said Monday.
Having a higher public float,
said Julian Tarrobago Jr., investment director at ATR KimEng Asset Management,
“is governance positive and should add depth to the market.”
The plan was originally announced
last year, with a deadline of November 2011, which was later delayed to the end
of 2012.
Meeting the 10% public ownership
floor isn’t an issue for most of the country’s major conglomerates, such as
beer-to-airline giant San Miguel Corp., banking- and property-focused Ayala
Corp., and power and toll-road company Metro Pacific Investments Corp. These
companies have between 24% and 40% of their stock in public hands.
The story is different for some of their units.
Three San Miguel subsidiaries—San
Miguel Brewery Inc, San Miguel Properties, and San Miguel Pure Foods Corp.—will
have to sell more shares if they are to stay listed. Pure Foods began gauging
investor interest in a premarketing process last week so it could sell $400
million worth of shares. A person close to the Pure Foods transaction said the
food company is aiming for an eventual public float of between 20% and 25%, up
from less than 1% now, and hopes to wrap up the sale by the end of this month.
Pure Foods confirmed the share sale, saying it is aimed at complying with the
new public-ownership rules.
San Miguel Brewery said in a
filing on Oct. 31 that it needs an extra six months after the December deadline
to raise its public float levels. It said its top shareholders, San Miguel
Corp. and Japanese brewer Kirin Holdings Co., are still assessing their
options.
Mr. Sicat, the exchange’s
president, didn’t comment on San Miguel Brewery’s case, but he said there could
be deadline extensions “on a case-by-case basis.” He said the PSE’s board of
governors will have to hear clear explanations from the companies, and that
letters from those seeking extensions so far haven’t been very specific.
San Miguel Properties has yet to
disclose its plan, leading some analysts to say that at this late stage a
delisting could be inevitable. The company had said on Aug. 30 that it was
assessing options to comply with the minimum public ownership, and that
voluntary delisting is possible if market conditions don’t allow it to pursue
any of the options.
If it exits the market, it won’t
be alone. On Oct. 29, Metro Pacific subsidiary Metro Pacific Tollways started a
month-long tender offer to minority shareholders in preparation to delist. And
GT Capital Holdings’ investment-banking unit, First Metro Investments, said
earlier in October that its board decided to voluntarily delist the company
rather than raise public ownership from 1.94%.
Companies that are delisted will
lose a potential source of cheap funds.
Mr. Sicat said he is optimistic
that at least half of the companies listed on the Philippine Stock Exchange
with less than 10% in public hands will meet the deadline.
“There’s more work for investment
bankers and lawyers, too…till the end of the year,” he said Monday.
Cris Larano and P.R. Venkat
Business & Investment Opportunities
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Healthcare and Life Science with expertise in ASEAN. Since we are currently changing the platform of www.yourvietnamexpert.com, you may contact us at: sbc.pte@gmail.com, provisionally. Many thanks.
No comments:
Post a Comment