SEC open to lower public float for large IPOs

Companies planning to list on the Philippine Stock Exchange, Inc. (PSE) with an initial public offering (IPO) exceeding P5 billion may seek relief to offer less than the required 20% public float, as the Securities and Exchange Commission (SEC) considers providing flexibility on the rule. 

“If there are requests for exemptive relief, then that’s assessed on a case-to-case basis,” SEC Commissioner McJill Bryant T. Fernandez told reporters on the sidelines of the InvestPH 2025 forum on Wednesday.

“Ultimately, the idea is we are firm with the 20%, [but] it gives you some relief and there’s a period you should comply with the 20%,” he also said.

So far this year, no new company has joined the stock market, but mobile wallet provider GCash, water utility Maynilad Water Services, Inc., and Cebu-based fuel retailer Top Line Business Development Corp. might do so soon. 

Globe Telecom, Inc. recently said it would seek regulatory relief from the 20% minimum public ownership (MPO) rule for the planned GCash IPO.

“There is a 20% minimum requirement for IPOs, but we have been able to get an approval from the SEC,” PSE President Ramon S. Monzon told reporters separately. 

Companies can offer 15% initially, provided they commit to conducting a follow-on offering or private placement within the next two to three years to comply with the 20% minimum public float requirement, Mr. Monzon said. 

He said this measure aims to encourage undecided companies to proceed with their listing.

Mr. Monzon said GCash qualifies for this exemption, as the only criterion is that the IPO must exceed P5 billion.

Further, he said this is not a permanent policy and that the PSE will reassess its effectiveness in the coming years. “We have a two-year window, then if that’s not working, we will extend it for another two years.”

Globe President and Chief Executive Officer Ernest L. Cu recently said the GCash IPO could target an USD 8-billion valuation and might happen by yearend.

Bloomberg previously reported that GCash’s IPO could raise up to USD 1.5 billion.

Sought for comment, BDO Capital & Investment Corp. President Eduardo V. Francisco said the regulator’s move could drive strong demand despite market uncertainties.

“The new rule granting public float flexibility for large IPOs may factor into the decision-making of certain IPO candidates, particularly companies that find it challenging to meet the 20% threshold,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message. 

He said this may help persuade GCash to list this year.

“However, it’s important to keep in mind that the public float requirement is not the only consideration for companies planning an IPO,” he added.

“They also look at investor sentiment, market liquidity, listing costs, and regulatory obligations, which are in turn tied to other factors. So, there is still a lot more that can be done to reinvigorate our stock market,” Mr. Colet said. – Ashley Erika O. Jose, Reporter