In a disclosure to the Philippine Stock Exchange (PSE) last June 11, real estate developer D.M. Wenceslao & Associates Inc. (DMWAI) confirmed that it will be listing its shares on the main board on June 29. It will be offering over 679 million shares to the public from June 18 to 22 at Php12 apiece.
DMWAI’s initial public offering (IPO) will be the first for 2018, and it will end an over 300-day period without any IPOs on the PSE. Those honors were previously held by food-and-beverage manufacturer Del Monte Philippines Inc. (DMPI), which announced last June 6 that they will be postponing its listing, which was scheduled two days before DMWAI, because of “volatile” market conditions.
The last time a company listed at the PSE was on August 8, 2017 with the IPO of since shipping firm Chelsea Logistics Holdings Corp. (CLC), making the current period the severest “drought” for IPOs after the global financial crisis of 2008.
In the infographic on this page, Entrepreneur Philippines plotted all the IPOs since 2008. The graph highlights the five longest droughts or gaps (counted in number of days) between the IPOs. As well, the IPOs were plotted along the daily movements of the Philippine Stock Exchange Composite Index (PSEi), giving an indication if IPO listings happen during peaks or troughs of the market cycle.
The listing of agribusiness firm AgriNurture Inc. on May 25, 2009 marked the end of the longest IPO drought in the past 10 years, which lasted 479 days. This can be attributed to the global financial crisis of 2008, which negatively affected several economic markets worldwide. Its local impact is most apparent in the country’s annual GDP growth rate, which lowered significantly in 2008 and even more in 2009.
Since AgriNurture’s listing, 48 other companies went public until 2017, and the gaps between IPOs have been much shorter since then. There have been several instances of two IPOs happening in the same week, and even one case of two IPOs happening on the same day: the listings of retailer Robinsons Retail Holdings and hospitality firm Discovery World Corp. on November 21, 2013.
Only three other droughts have breached the 200-day mark after the crisis: the 205-day gap preceding the IPO of real estate developer Golden Bria Holdings Inc. in June 29, 2016; the 206-day gap before the listing of oil and gas company PXP Energy Corp. in September 12, 2011; and the current gap, which will reach 325 days by the time DMWAI lists on the PSE.
While the last several months have not seen any IPOs at all, there have been a few firms that have announced their intentions to launch IPOs this year beyond DMPI and DMWAI. Last February, food-and-beverage firm Fruitas Holdings Inc. announced plans of going public this year, while the local subsidiary of Southeast Asian airline AirAsia is preparing to launch its over $250-million IPO by the end of the year.
Lorenzo Kyle Subido is a staff writer of Entrepreneur PH