PSE pursuing MPO hike for listed firms

The Philippine Stock Exchange (PSE) is reconsidering to hike the minimum public ownership (MPO) requirement for public companies after its implementation was stalled in recent years on the back of market volatility.

PSE president and chief executive officer Ramon S. Monzon said the bourse will be meeting with the Securities and Exchange Commission (SEC) on Wednesday to discuss the imposition of a higher MPO.

“Two, three years ago they (SEC) came up with a draft circular increasing the MPO to 20 percent, and then it wasn’t followed through. We said, you know, we want them to pursue that (because) we’re supporting that,” Monzon said in a chance interview at the PSE Tower in Bonifacio Global City on Saturday, 5 October.

In 2017, the SEC published a draft circular increasing listed companies’ MPO to 20 percent from the current 10 percent mandated in 2011. The goal was to boost the attractiveness of listed shares, increase liquidity and ultimately enhance the country’s capital market.

The release of the final circular has been delayed since. In an August 2019 interview, SEC commissioner Ephyro Luis Amatong said they’re mulling over increasing the MPO to 25 percent in line with the standards of other Southeast Asian countries, but added they have not yet come up with a timeline yet.

Still, the SEC has required firms seeking to conduct a maiden offering to observe the 20 percent MPO since 2017. To make it easier for existing listed firms to comply, the SEC said it might lengthen the transition period for compliance to the final MPO level instead of doing it in tranches.

Among others, the SEC primarily watches the performance of the PSE index, which gauges investor confidence in the market. The PSEi ended Friday up 2.11 percent to 7,704.60 after registering losses for the most part of the week.

In 2018, the main index began at a high of 8,724.13 and finished at 7,466.02, counting soaring domestic inflation and the trade war between United States and China as among key drivers for the plunge. Also, as a result, D.M. Wenceslao & Associates Inc. emerged as the lone company to conduct an IPO in 2018.

Amatong said there were “no reason why we shouldn’t do it now” considering that recent key market drivers have been external instead of domestic. In the local front, easing inflation and interest rate cuts from the Bangko Sentral ng Pilipinas are seen painting better market environment.

Meanwhile, Monzon said the success of Kepwealth Property Philippines Inc.’s debut could also be what’s triggering the long line of IPO applications that came in the second half of the year.

KPPI shares ended Friday down 0.31 percent to only P9.55 apiece, albeit higher than its IPO price of P5.84 per share in its August debut in the stock market.

“Our first IPO was already in August. Then there was a rush. I think they’re very happy with what happened with Kepwealth. We have a couple in the pipeline. We have Axelum (Resources Corp,), AllHome (Corp.), we’re waiting for Metro Pacific Hospital (Holdings Inc.), Fruitas (Holdings Inc.). Cal-Comp (Technology Philippines Inc.) is also in the pipeline,” Monzon said.

Asked if the rush could extend to next year, he said: “I think so. It’s also not good to have a lot of IPO, because it reduces liquidity in the market. Maybe there will be a little wait-and-see again.”