Accounting firm SGV and Co. said the recent listing of the country’s first real estate investment trust (REIT) at the Philippine Stock Exchange (PSE) may spur activity in the equities market and help it recover from the economic effects of the pandemic.
Dolmar C. Montañez, an SGV partner, said the recent initial public offering (IPO) of Ayala Land Inc.-led AREIT Inc. may encourage other real-estate players to convert their current real-estate portfolios into REITs, which may positively impact the local bourse’s recovery from the effects of the pandemic.
“What is noteworthy is the landmark listing of the first REIT in the country 10 years after the REIT law was passed by Congress. This happened after the other participating regulatory offices collaborated to amend the existing implementing rules and regulation of the REIT law to address major concerns from potential REIT sponsors,” he said.
AREIT shares were listed in August.
IPOs in the Asean region, the Philippines included, were depressed as the pandemic felled most of the top economies in Southeast Asia, while other regions in the world enjoy higher listings as companies grabbed the opportunity to raise funds due to high liquidity.
Across Asean, while Malaysia saw steady improvement in overall activity, the economic impact of the pandemic has been significant, particularly in Indonesia and Thailand, the accounting firm said.
“As a result, the region may take an extended time to recover,” the accounting firm said. “That said, Indonesia has one IPO in the pipeline that could raise $500 million before the end of the year, and Thailand has several sizeable IPOs in the pipeline that could go public in fourth quarter of 2020.”
Montañez noted that many companies in the Philippines shelved their plans to go public due to the impact of the pandemic on local businesses and the overall economy.
“Only two companies completed their IPOs this year, with a total size of approximately $278 million. We expect to see another initial listing by the end of October, which is expected to be the biggest since 2016.”
He was referring to Converge Information and Communications Technology Solutions Inc., a company led by Pampanga businessman Dennis Anthony H. Uy, which is expected to raise some P29 billion in fresh cash.
Meanwhile, PH Resorts Holdings Inc., the gambling unit of Davao businessman Dennis Uy, is also doing its follow-on offering, raising some P756 million from the market.
Capital raised from the local equities market in the January-to-June period amounted to only P20.83 billion, mainly from one initial public offering, one follow-on offering, one stock rights offering and two private placements, the PSE said earlier.
Since the start of the year through the third quarter, there were 77 IPOs in Asean which raised $4.3 billion, down by 13 percent in volume but an improvement in proceeds by 12 percent compared to the same period last year, SGV said.
In the third quarter alone, there were a total of 33 IPOs raising $1.1 billion across Asean, up 175 percent in volume and 491 percent in proceeds from the second quarter, it said.