INITIAL public offerings (IPOs) this year are seen to be dominated by companies serving consumers, entities in growth sectors, and real estate investment trusts (REITs), as the market further gains strength.
“We see IPOs for this year being dominated by companies in the growth sectors such as renewable energy, fintech, etc. and the consumer sector. We are also seeing more property companies pursuing REIT listings with interest rates expected to peak within the first half of the year,” AP Securities, Inc. Equity Research Analyst Carlos Angelo O. Temporal said in a Viber message.
“In general, the IPOs will depend on market conditions. If we see the market to continue to gain strength, then we can expect more IPOs,” COL Financial Group, Inc. First Vice-President April Lynn C. Lee-Tan said in a Viber message.
According to Ms. Lee-Tan, the companies’ entry into the capital market will rely on stock market conditions. Companies are expected to list as the benchmark Philippine Stock Exchange index continues to go up.
In January, the Philippine Stock Exchange said it is targeting 14 IPOs this year, 11 of which are companies and REITs that will list on the main board and three on the small, medium and emerging board.
Meanwhile, Mr. Temporal said he expects more maiden listings by the second half of this year, with companies that deferred listing last year seen pushing through this year.
“Considering that macro conditions are expected to gradually normalize by the second half while reopening momentum remains intact and high interest rates expected to persist throughout the year, [the] second half is likely to provide an attractive window for IPOs,” Mr. Temporal said.
“With that said, companies that were supposed to go public last year are likely to push through with their plans this year and other companies that are looking to expand to ride on the country’s economic recovery are likely to choose equity financing through IPOs over debt financing,” he added.
Mr. Temporal said that the return of foreign inflows and the improvement in the market’s liquidity in recent weeks are likely to entice more companies to go public.
Recently, tech retailer Upson International Corp., which deferred its listing last year, secured approval from the stock exchange on its P5.43-billion IPO.
The offering will allow Upson to sell up to 789.47 million primary common shares and up to 98.68 million secondary common shares, with an over-allotment option of up to 98.68 million at P5.50 each.
According to Upson, the gross primary proceeds of around P4.34 billion will be used to fund the expansion of its store network.
The company plans to open 250 new stores or an additional 25,000 square meters of retail space from 2023 to 2027.
According to Mr. Temporal, Upson’s IPO is expected to strengthen the company’s balance sheet and enable its “aggressive” expansion plan.
“While demand for electronic products, particularly personal computers, is expected to slow down from its pace during the pandemic, growth narrative for Upson remains alluring, backed by sustained momentum of Philippine reopening and its aforementioned expansion plan which could scale up significantly its market share further,” Mr. Temporal said.
“It is also good that the company is open to acquisition opportunities as this should aid in increasing market share in a fragmented industry such as electronic retail,” he added. — Justine Irish D. Tabile