The Securities and Exchange Commission said it remains firm on the 20-percent minimum public float required for companies applying for an initial public offering (IPO).
It cited the need to maintain the higher public ownership to help further deepen the local capital market.
It said companies planning to go public at a lower public float of 15 percent could only be granted by way of exemptive relief from the SEC and only if it is deemed necessary by the commission.
It is also subject to strict criteria as companies that will benefit from the exemptive and would need to bridge any gap from the 20 percent within two years from the listing date.
The SEC also emphasized that beyond enhancing market liquidity, the minimum public ownership requirement plays a crucial role in improving price discovery and reducing opportunities for price manipulation.
“The float requirement also seeks to reduce ownership concentration and encourage good corporate governance, ultimately strengthening the Philippine capital market,’ the SEC said.
Mobile wallet giant GCash is reportedly planning to list on the Philippine Stock Exchange by the second half of the year. As the company is reportedly seeking valuation of $8 billion, it should sell $1.6 billion worth of shares to comply with the 20 percent public float.
At 15 percent public float, it will need to sell $1.2 billion worth of shares.
A veteran stockbroker said the PSE’s move to accommodate GCash IPO is a step back from the previous thrust of the SEC which is boost local market liquidity and attract quality investors.
“They [PSE] must review the reasons while the SEC raised the public float requirement to 20 percent. The 20 percent is even low versus other the public float requirement in other Asian exchanges,” the broker said.
Instead of lowering the public float requirement for companies planning to list, the PSE should look for other ways to make the IPOs more attractive, the broker said.
“I think if GCash offers 40 percent of the company people will buy it. It is a very attractive company,” the stockbroker said.