MANILA • A clutch of Philippine firms, including newly launched real estate investment trusts (Reits), could make the country South-east Asia's biggest IPO market this year, driven by attractive valuations and a recovering economy.
Investors and bankers say consumer retailers and Reits are lining up record fund-raisings that could top US$4 billion (S$5.3 billion) this year, more than the combined tally of the last seven years, according to Refinitiv data.
Across the rest of the region, only a US$2 billion Singapore IPO by a subsidiary of Thai Beverage, smaller floats in Indonesia and insurance IPOs in Thailand are among those lining up for launches this year.
"We see a confluence of abundant liquidity, recovering macro fundamentals and relative valuation attractiveness contributing to the positive investor sentiment towards South-east Asia IPOs," said Mr Martin Siah, South-east Asia head of corporate and investment banking at Bank of America Merrill Lynch. "The strength in global capital markets has made it very attractive for quality Philippine issuers who have been timing their eventual IPOs."
A US$1.5 billion (S$2 billion) float by Singapore sovereign wealth fund GIC-backed Monde Nissin, the company behind the iconic Philippine instant noodle brand Lucky Me and meat alternative Quorn, is set to be the biggest Philippine IPO, sources familiar with the matter said. Others include two US$500 million Reits, from conglomerate-owned SM Prime and Robinsons Land.
"It is really a question of when, not if. On the size, it depends on what the market can absorb," Mr Alex Pomento, vice-president for investor relations at SM Prime, told Reuters.
A long-pending US$1.5 billion initial public offering from National Grid Corp of the Philippines (NGCP), to comply with regulatory requirements, is also expected, though sources said the process could be pushed to next year.
Robinsons Land did not respond to a request for comment. NGCP declined to comment while calls to Monde Nissin were unanswered.
Issuers are keen to take advantage of the abundant market liquidity and tap investors before next year's Philippine presidential election that could create market volatility.
"Companies are willing to fund expansion. That is what we did not experience last year when a lot of them held back on expansion plans, borrowing and IPOs," said Mr Michael Gerard Enriquez, CIO of Sun Life of Canada (Philippines).
The economy slumped by a record 9.5 per cent last year, the worst contraction in South-east Asia for 2020, as Philippines enforced one of the world's longest and strictest pandemic-induced lockdowns.
The government's record US$93.7 billion national budget is expected to pump-prime the economy, which is targeted to grow by 6.5-7.5 per cent this year, government officials say.
A strong performance of IPOs launched last year is also supporting new issues despite the broader market falling 9 per cent last year.
"I assume these will be well-received. They will be a play on high growth and consumption and economic dividends," said Mr Eduardo Francisco, president of BDO Capital and Investment Corp, referring to potential IPOs of Monde Nissin and NGCP.
This year, about four property units are set to launch Reits, an emerging asset class, after new rules announced last year allowed lower public floats and tax breaks for Reits, which typically pay higher dividends to investors.
"Given the attractiveness of Reits as an investment and the robust real estate market fundamentals in the Philippines, we are expecting to see more Reit IPOs come to the market," said Mr Siah.
REUTERS
