Listing costs hold back SMEs from going public

JOEFEL O. BANZON

Although there are a lot of benefits a company could get in going public, Filipino firms, specifically Small and Medium Enterprises (SMEs) are still intimidated by the cost of getting their companies listed on the stock market.

This is the assessment made by financial analyst Alvin Arogo noting that there are potential family-owned companies in Cebu for instance that are still hesitant to enter the Initial Public Offering (IPO).

The cost of going public, like opening the company's books in public, disclosures, transparency, among others are just few of the intimidating factors that hold SMEs from going public.

Expenses in compliance, branding are also added costs that companies should invest on once they decided to go public.

"Filipino companies know the cost of going public," Said Arogo.

In a separate earlier interview with Philippine Stock Exchange (PSE) chief operating officer Ruel Refran, he said that companies regardless of size, should consider to "break-out" and grow in this borderless economy, otherwise they will be swallowed by big boys.

PSE has been rallying strong advocacy to convince Filipino companies, SMEs to enter the capital market.

"There's an opportunity for you to break-out. You cannot remain as SMEs," said Refran.

Refran explained that while the business climate and dynamics are changing very fast, there is a need for smaller companies to get a stronger shield, and entering the capital market could accelerate their plans for growth and even expand in the global landscape.

As most of Filipino SMEs are now passing on business leadership to next generation, this is the time of "breakingout" from the comfort of being a "family business."

While there are pros and cons in entering the public financial sphere, the sentiment of most SMEs in the Philippines right now, is now to manage the cost of going public, added Arogo.

Refran maintains that SMEs should understand that entering into IPO is not just accessing capital from the the investors, but it is also to show to the world the company's seal of excellence--in governance and professionalism.

In this new business environment, family businesses cannot remain as SMEs (forever), now is the time to "break-out" as the world is becoming smaller.

"PSE is not confined to the big boys. professionalism is the next upgrade for SMEs. PSE is not only for the big boys. A listed company has good seal of excellence, easier to acquire, attract partnership with companies here and abroad," added Refran.

"When you list, even if you do not raise funds, you already determine the value of the company," insisted Refran.

Instead of being intimidated on the cost of going public which requires transparency, good governance, and professionalism, businesses should understand that this will bring even family-run companies to last through generations.