Geopolitics, rate cut delays could spoil IPO rebound in 2024

Geopolitical tensions and interest rate cut delays could play the spoiler’s role in initial public offerings (IPO) staging a major comeback in the local bourse this year.

The Philippine Stock Exchange (PSE) is expecting six companies to go public this year, double from last year’s three IPOs.

The PSE had nine IPOs in 2022, the most number of IPOs in a single year since 2007.

“While there is an expectation of an IPO rebound in the Philippines coming from a lackluster year, companies still need to be wary of potential headwinds coming from geopolitical tensions and delays in expected interest rate cuts,” SGV Capital Markets group leader Dolmar Montañez said.

Montañez said companies planning for IPO need to strengthen their financials and demonstrate sustainable operations that can support the eventual valuation of their companies during IPOs.

Aside from interest rate and geopolitical tensions and conflicts, other key factors to consider by IPO candidates looking to go public this year include inflation, government policies and regulations, and recovery of economic activities.

“Companies aspiring to be listed need to prepare early so they can move with ease when the right opportunity comes,” Montañez said.

Citicore Renewable Energy Corp. (CREC), a pure-play renewable energy company, is targeting to list its shares on the PSE in or around the second quarter this year.

The company earlier decided to adjust the indicative date of the offer from March 2024 to the second quarter after it received inquiries from other institutions with regard to participation in the IPO.

Another company that is eyeing to conduct an IPO this year is OceanaGold (Philippines) Inc.

OceanaGold Philippines’ IPO is targeted to run from April 22 to 26, with listing on the PSE scheduled for May 7.

AP Securities in a report said Enrique Razon’s Prime Infrastructure is among the most highly anticipated IPOs in the market.

The company filed for a P28.19 billion IPO back in 2022, but it has yet to push through.

“Not listed yet but Prime Infrastructure is already very actively involved in the local infrastructure scene investing in power and local utilities,” AP Securities said.

Prime Infra, through Prime Energy, is the operator of the Malampaya gas-topower project.

The company is committed to providing economically enduring, environmentally-resilient and socially relevant projects to address urgent priorites in three core sectors—water, sustainable energy and waste management and sustainable fuels.

At present, AP Securities said Razon-related stocks have been providing strong support to the local index and have helped attract investor interest into the country’s equities market.

It said these are on top of producing sizeable returns for its investors.

“All of the Razon firms are all significant players in their own sectors, often times dominating their respective fields (gaming, port operations, etc),” AP Securities said.

High profile ICTSI and Bloomberry have also helped promote the country globally, the former via its international port operations while the latter has helped boost tourism into the country. Manila Water and Apex Mining, both non-index names, also trade more actively relative to the other smaller counters,” it said.

AP Securities said ICTSI and Bloomberry collectively account for over eight percent of the local index.

In terms of trading activity, it said both listed firms are among the most actively traded index names in the market, averaging $5 million and $1.6 million per day over the past year.