THE Philippine Stock Exchange (PSE) is pushing reforms to revitalize the equities market by making it easier for more companies, particularly smaller firms, to raise capital via initial public offerings (IPOs).
PSE President and CEO Ramon Monzon told reporters late Friday that the bourse and the Securities and Exchange Commission (SEC) were currently working on proposals to reduce the public float requirement for IPOs, emphasizing that the issue was still under review.
“[The] SEC and I are still working on reducing the public float” for IPOs, Monzon said, adding that feedback on the proposal is expected to be evaluated in the coming weeks.
He explained that the exchange was looking at allowing smaller IPOs by lowering the minimum amount required to be offered to the public (such as allowing IPOs in the region of P500 million) to make capital-raising more accessible.
The proposal also includes reducing the number of required shareholders for IPOs, with the aim of allowing greater participation from institutional investors rather than forcing companies to immediately meet broad retail ownership thresholds.
“Hopefully, we can target some small and medium enterprises (SMEs) also who need the financing,” he said, noting that the existing rules tend to favor very large companies, while many viable businesses are unable to tap the market under current requirements.
The PSE chief said the exchange was hoping that the proposed adjustments would encourage more SMEs to consider IPOs as a fundraising option, especially at a time when market liquidity remains limited.
Monzon emphasized that the exchange was focused on ensuring that the market structure supports capital raising even though overall market conditions remain challenging.
Late last year, the PSE and the SEC agreed on a transitional scheme allowing large companies to list with a lower public float of 15 percent.
The SEC in early December sought comments from stakeholders on a draft circular on the minimum public ownership (MPO) requirement. The draft proposes a tiered public float system based on market capitalization instead of maintaining the standard 20-percent MPO rule to make the policy more flexible to market needs.