The Securities and Exchange Commission (SEC) has approved the initial public offering (IPO) of stock broker CTS Global Equity Group Inc., which aims to raise as much as P1.37 billion.
In its March 10 en banc meeting, the SEC gave its nod to the registration statement of CTS Global covering 6.87 billion common shares.
CTS Global will offer to the public up to 1.37 billion common shares priced at up to P1 per share, to be listed on the Small, Medium and Emerging Board of the Philippine Stock Exchange Inc. (PSE).
Net proceeds from the offering is expected to amount to about P1.35 billion, which the company will use for the scaling of its global trading operations, client account management expansion, and general corporate purposes.
CTS Global engages in the trading of equities as a broker-dealer for the Philippine market, as well as global markets including the United States, China, Hong Kong, and Japan. Its chairman, Edward K. Lee, is also the head of listed brokerage firm COL Financial Group Inc.
The IPO will run from March 31 to April 6, with listing on the PSE scheduled for April 13, according to the timetable submitted to the SEC.
CTS Global tapped SB Capital Investment Corp. as the issue manager, underwriter and bookrunner for the offer.
Currently, the company has a pool of over 30 individual traders who manage a combined capital amounting to P550 million. Most of the proceeds of its IPO, or about P1.23 billion, will be used to scale up it operations globally.
“For the past few years, the company has consistently generated profits from its assets under management but was not able to maximize its bottomline profit due to overhead expenses. As the traders scale their accounts using the existing strategy, the company’s overhead expenses will stay the same, giving a promising opportunity for its operating leverage,” it said.
“For the past decade, the company maintained its capital stock at P200 million, only raising it to P500 million in the last quarter of 2019 and an additional P50 million in 2020. A further increase in capital to be deployed in the global markets is the key to CTS Global taking it to the next level.”
The company will allocate some P20 million to build the client accounts management segment and offer its services to interested clients as it hires more talent in the new departments and creates the client acquisition and support infrastructure. During the first few years in business, this segment will need the capital to fund the initial expansion in operation, it said. The remaining balance of about P100 million will be used for general corporate purposes, such as any adjustments needed depending on the country’s pandemic recovery. This may be in the form of developing the company-owned office space to the extent necessary or further improvements in the digital systems for the work-from-home arrangement.