The Philippine Stock Exchange wants to keep the existing rules on the minimum public float of companies that plan to conduct initial public offerings based on the size of market capitalization.
This is one the major comments submitted by the local bourse to the Securities and Exchange Commission in response to the corporate regulator’s proposal to increase the public float of IPO-bound companies to 20 percent from the current 10 percent.
“It should be unitary but based on market capitalization of the company,” a PSE source said.
The source said in most exchanges, the minimum public offering of IPO-bounded companies was based on market capitalization.
This means that companies with higher capitalization can have lower public float.
The source, citing an example, said a company planning to raise P500 million should float at least 33 percent of its shares to the public. However, companies that plan to generate over P10 billion in proceeds should offer at least 10 percent of its shares to the public.
The source said the reason behind this was that the market might not be able to absorb the offering of large IPOs.
Under the SEC’s proposed amendments to minimum public offering rule, the corporate regulator will require all companies with intention to list their shares in an exchange to float at least 20 percent of their issued and outstanding shares.
The source said while PSE wanted to retain the existing rule on IPOs, it was also amenable to the SEC proposal to gradually increase the public float of existing listed firms to 15 percent by end 2018 to 20 percent by 2020.
“We are okay with that,” the PSE source said.
The SEC earlier said 68 publicly-held firms companies needed to sell more shares to the public to comply with the planned imposition of a 20-percent minimum public ownership.
SEC director for market securities and regulations Vicente Graciano Felizmenio said in a presentation during a public consultation that 39 companies would be affected by the imposition of a 15-percent public float by end-2018 and 68 firms by the 20-percent public float requirement by end-2020.
The SEC said assuming all 68 companies complied with the new requirement, a total of P130 billion worth of funds would be raised through the equities market.
The SEC said the market could absorb the amount given the ample liquidity in the financial system. Minimum public float is currently at 10 percent of all shares.