PSE eases public float level to 15%

The Philippine Stock Exchange (PSE) has received regulatory approval to temporarily reduce the minimum public ownership requirement for initial public offerings (IPOs) from 20 percent to 15 percent to ease listing requirements to address market liquidity concerns.

PSE president and CEO Ramon S. Monzon confirmed on Wednesday that the Securities and Exchange Commission (SEC) has approved the adjustment, which will allow companies to list at a lower public float, provided they conduct a follow-on offering or private placement within two to three years to meet the 20 percent threshold.

“With the liquidity problems we’re having in the market now, companies are having a hard time deciding on an IPO because of the inability or fear that they cannot meet the 20 percent public float,” Monzon said.

“So I said, are you okay if we reduce the public float to 15 percent? With the condition that the company will do a follow-on offering or even a private placement in the next two or three years to meet the 20 percent requirement.”

2-year window

The relaxed requirement will be in effect for an initial two-year period, with the possibility of an extension based on market conditions.

“It’s not permanent. It’s a transition until the market recovers,” Monzon said. “If companies are still clamoring for it after two years, then we can extend it for another two years.”

The PSE has not widely publicized the change to ensure underwriters continue to exercise due diligence.

“Actually, we don’t advertise it because it might make the underwriters lazy. So when we talk to companies that want to do an IPO, we tell them about this,” Monzon added.

While the PSE aims to facilitate IPOs, Monzon acknowledged the challenge of maintaining liquidity in the market.

He noted that the PSE is reviewing its index policies, as the current methodology prioritizes float and market capitalization, which may not always reflect actual trading activity.