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Fund-raising surge seen from higher float level

Posted on June 15, 2017

THE BOURSE could see billions in additional funds raised starting next year as listed firms start moving to meet a higher minimum public ownership (MPO) requirement, Vicente Graciano P. Felizmenio, Jr., director of the Securities and Exchange Commission’s (SEC) Market and Securities Regulation Department, said in a public consultation yesterday at the Philippine International Convention Center in Pasay City.

Companies planning to list their shares for the first time will have to comply immediately with a 20% minimum public ownership requirement.
The corporate regulator is looking to release the new MPO rules by July. Companies planning their debut at the PSE will have to immediately conform with the 20% MPO that is double the current 10% minimum. Listed companies found short will have until 2018 to reach at least 15%, while a 20% floor is targeted by the end of 2020.

SEC has said there are 39 listed companies that have a public float less than 15%. Should all these firms comply with the increased float by 2018, the stock exchange will raise P37.23 billion by the end of next year, Mr. Felizmenio said.

The 29 remaining listed companies that have a public float greater than 15% but less than 20% could raise around P112.5 billion by 2020.

Assuming that all 68 immediately raise their float levels to 20% will yield P130.98 billion in additional funds, he added.

Computations were based on the prices of stocks at the close of the market on May 31.

“This is basically a conservative figure... because the issue later on... is if the market can absorb all of this fundraising,” Mr. Felizmenio said, noting that a total of P176.8 billion was raised through initial public offers, follow-on offerings, private placements and stock right offers in 2016.

SEC Chairperson Teresita J. Herbosa said in the same event that “[c]ompanies would have to do some things to attract investors and help the fundraising to reach the new public float levels.”

“If you have a liquid market and people are confident about the performance of the companies, you have corporate governance in place, there are measures to protect shareholders, even incidents that make the news will not really affect (sentiment),” Ms. Herbosa told reporters after the public consultation. -- Arra B. Francia