Enabling opportunities
THE NONSTOCK, nonprofit group Investment House Association of the Philippines, or IHAP, began operations in 1974, about a year after the Investment House Law under the Presidential Decree No.129 was enacted. IHAP was established to promote a better understanding of the role and functions of investment houses and to enhance the contributions of these enterprises to the Philippine economy, mainly through the development of capital markets.
The members of the organization, which have grown to more than 30 over the years, have provided, and continue to provide, crucial financial and advisory services, including underwriting of public offering of debt and equity securities, to dozens of corporations, helping them, and the economy at large, to prosper.
On March 15, a new batch of IHAP officers was sworn into office, led by Investment & Capital Corporation of the Philippines (ICCP) President and COO Conrado Gloria Jr.
Mr. Gloria, who has more than three decades of investment banking experience under his belt, took over from Manuel N. Tordesillas, who held the presidency of IHAP for more than half a decade, starting in 2011. The company Mr. Gloria heads engages in debt and equity underwriting and arranging, project finance, financial advisory, and mergers & acquisitions, among many others.
IHAP is setting its sight on making itself even more relevant in the country’s economic affairs under the leadership of Mr. Gloria. In an interview with BusinessWorld, Mr. Gloria said that IHAP has become more active in representing the interests not only of its members but also of the investing public to the regulators, which include the Bangko Sentral ng Pilipinas and the Securities and Exchange Commission.
It will do so by paying more attention to middle-market firms, which can benefit greatly from the services investment houses offer.
“I think it’s about time that IHAP revs up to promote and support entrepreneurship and the middle market because after all, that I think, personally, is where the [added value] comes in,” Mr. Gloria said.
“I view investment banking [as having] a very catalytic function in the economy,” Mr. Gloria noted, adding that they offer a more dynamic type of intermediation. Investment bankers, he said, offer innovative kinds of funding sources that companies, and even the industries in general, need.
There are many middle-market businesses, Mr. Gloria said, that are well-equipped to achieve the next level of growth in their respective industries. “They certainly need that push in order to transcend that level. That may mean accessing funding sources or accessing the right market and the right parties to partner with. That push is something that investment houses can competently provide,” he said.
One example Mr. Gloria cited of how investment houses can help transform small players into industry giants is Phoenix Petroleum Philippines, Inc. (Phoenix), which used to be a small chain of gasoline stations mostly located in Mindanao. After its initial public offering in 2007, Phoenix got access to capital markets to fuel its rapid growth and expansion. The company is now the leading independent oil company in the country, competing with longtime oil behemoths.
“Much of the credit goes to the man who built it himself,” Mr. Gloria said, referring to Dennis Uy, founder of Phoenix. “But I would also credit that to the support [of] the investment banking professionals. We are enablers. We offer opportunities to businesses like that [which] aspire to grow and become relevant in their own industries.” Enabling opportunities for businesses may not put an end to every economic problem the country faces, like financial exclusion, but it’s a significant step to generating jobs, for instance, in the provinces not only in Metro Manila.
Investment houses may find that lending a hand to middle-market firms is lucrative. It’s not about how big or small a company is, Mr. Gloria said, “It’s how you nurture that business.” A medium-sized company today may soon become an industrial heavyweight.
“If investment houses can nurture relationships with entrepreneurs, it’s going to be lucrative for them in the long term especially if those entrepreneurs grow,” Mr. Gloria said, who noticed an openness on the part of the entrepreneurs to engaging advisers, consultants and the like.
While steering the organization toward becoming more active in its involvement with middle-market firms, Mr. Gloria would want it to maintain a good relationship with the regulators, who set the boundaries of the operations of investment houses.
“Where we can support the reforms, we will,” he said. “We will collaborate with our important regulators — BSP, SEC — to further strengthen and better protect investors’ interests. We’re for that, definitely.”
On March 15, IHAP also held the awarding ceremony for the Second IHAP Awards on the same day the directors and officers were inducted, where some of the country’s leading conglomerates and investment houses were recognized for strategic partnerships and projects sealed in the previous year.
The IHAP Awards was initially launched in 2016 in collaboration with professional auditing firm KPMG R.G. Manabat & Co. (KPMG RGM&Co.). The Awards aims to promote excellence and global best practices by recognizing the deals and investment houses that contributed to the growth of Philippine companies, the economy and the capital markets.
This year’s Board of Judges includes Securities and Exchange Commission (SEC) Chairperson Teresita Herbosa, Philippine Stock Exchange (PSE) President Hans Sicat, Philippine Dealing Systems Holdings Corp. (PDS) President and CEO Jing Crisol, Fund Managers Association of the Philippines (FMAP) President Deanno Basas, Financial Executives Institute of the Philippines (FINEX) President Benedicta Du-Baladad, and Sharephil President Francis Lim. The official results were tabulated and audited by KPMG R.G.M. & Co.
The Best Advisory Deal of the Year award went to GT Capital Holdings, Inc. (First Metro Investment Corporation), while the Best Advisory House of the Year was conferred to First Metro Investment Corporation. The Best Equity Deal of the Year went to Cemex Holdings Philippines, Inc. (BDO Capital and Investment Corporation). SMC Global Power Holdings Corporation (BDO Capital and Investment Corporation / RCBC Capital Corporation) received the Best Fixed Income Deal of the Year, and GN Power Dinginin Ltd. Co. was named the Best Project Finance of the Year.
Meanwhile, the citation for the Deal of the Year went to GT Capital Holdings, Inc., and BDO Capital and Investment Corporation bagged the awards for Best Equity House of the Year, Best Fixed Income House of the Year, Best Project Finance House of the Year, and Investment House of the Year.
In line with his vision to support the middle market, Mr. Gloria plans to introduce a few improvements in the IHAP Awards criteria moving forward, and hopes to see more deals that are not just big in size and complex in nature but also economically beneficial.