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Philippines set to take uncommon, high spot for IPOs in Southeast Asia By Reuters

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© Reuters. Financial district amid the coronavirus outbreak in Manila

By Neil Jerome Morales and Anshuman Daga

MANILA / SINGAPORE (Reuters) – A number of Filipino companies, including newly formed Real Estate Investment Trusts (REITs), could make the country Southeast Asia’s largest IPO market this year, driven by attractive valuations and a recovering economy.

Investors and bankers say consumer retailers and REITs are posting record fundraising drives that could exceed $ 4 billion by 2021, more than the past seven years, according to Refinitiv data.

In the rest of the region, there is only one IPO of a subsidiary of Thai Beverage in Singapore worth US $ 2 billion, smaller floats in Indonesia and IPOs of insurance companies in Thailand this year.

“We are seeing a confluence of abundant liquidity, the restoration of macro fundamentals, and relative valuation attractiveness that are driving positive investor sentiment about Southeast Asia IPOs,” said Martin Siah, head of corporate and investment banking, Southeast Asia, Bank of America Merrill Lynch ( NYSE :).

“The strength of global capital markets has made it very attractive to high quality Filipino issuers who have planned their potential IPOs.”

A $ 1.5 billion float from Singapore-based GIC-backed Monde Nissin, the company behind legendary local instant noodle brand Lucky Me! and meat alternative, Quorn, will be largest local IPO, sources familiar with the matter.

Others include two conglomerate owned two $ 500 million REITs owned by SM Prime and Robinsons Land.

“It’s really a question of when, not of the case. The size of what the market can hold depends on the size,” Alex Pomento, vice president of investor relations at SM Prime, told Reuters.

A long-awaited $ 1.5 billion IPO National Network (LON 🙂 Corp of the Philippines (NGCP) to meet regulatory requirements is also expected, although sources said the process could be postponed until next year.

Robinsons Land did not respond to a request for comment. NGCP declined to comment while calls to Monde Nissin went unanswered.

The issuers want to take advantage of the abundant market liquidity and target investors ahead of next year’s presidential election, which could lead to market volatility.

“Companies are ready to fund expansion. We did not see this last year when many of them withheld expansion plans, loans and IPOs,” said Michael Gerard Enriquez, CIO of Sun Life of Canada, Philippines.

The economy slumped by a record 9.5% last year. This was the worst drop in Southeast Asia in 2020 when the Philippines imposed one of the longest and strictest pandemic lockdowns in the world.

The government’s record budget of $ 93.7 billion is expected to boost the economy, which is expected to grow 6.5 to 7.5% this year, government officials say.

Strong performance from IPOs launched last year also supports new issues, despite the broader market down 9% over the past year.

“I expect these will be well received. They will be a game for high growth, consumption and economic dividends,” said Eduardo Francisco, president of BDO Capital and Investment Corp., of possible IPOs for Monde Nissin and NGCP.

This year around four real estate units will launch REITs, an emerging asset class, after the new rules announced last year allowed lower public floats and tax breaks for REITs, which typically pay higher dividends to investors.

“Given the appeal of REITs as an investment and the solid fundamentals of the property market in the Philippines, we expect more REIT IPOs to come,” said Siah of BofA.

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