IPO would unlock firms’ potentials

Here’s the happy news: The Philippines Stock Exchange Inc. (PSE) recently announced that big companies planning to be listed in the Philippine stock market through public offerings (IPOs) are now allowed to offer less than the 20 percent public float requirement for their planned IPOs.

- BILLY CORTEZ

PSE President and CEO Ramon Monzon said PSE was able to secure approval from the Securities and Exchange Commission (SEC) that these companies could also offer 15 percent, with the commitment that they will make a follow-on offering or a private placement in the two or three years in compliance with the 20 percent public float requirement. Monzon said this new rule would make it easier for companies to come up with the decision to do an IPO earlier than later. This is a better bet than what has been the old PSE rule for a long time.

Deciding to go public is a milestone for any company; it is both a big step and a tough choice. To begin with, one must be aware of some disadvantages of becoming a publicly listed company, such as ownership dilution, more public disclosure of major corporate decisions, possible additional restrictions on operational issues, constraints on some growth plans, and even the high cost of getting the company’s shares listed in the Philippine stock market.