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More IPOs seen next year says auditing firm

By Miguel R. Camus

More companies have signaled their interest to conduct an initial public offering (IPO) next year to raise funds amid an improving business environment said an official of auditing firm Punongbayan & Araullo on Monday.

During a lunch briefing with reporters, Punongbayan partner and division head Lilian Linsangan said the company has been approached by a number of firms seeking to expand their businesses by tapping the equity market.

“Interest has been picking up since July and hopefully this trend will continue,” said Linsangan. She said the firm has since reviewed proposals from “less than 10 companies” coming from a range of industries.

“These are smaller companies that have grown, and now seek to expand their businesses,” she said, noting that the firms are looking to list in the local stock exchange “anytime in 2010.”

While unable to give additional details on the nature of the firms that have approached Punongbayan, Linsangan shared that firms are looking at raising significant amounts from at least P500 million or more.

“So much is at stake if you open your company to the public so it doesn’t make sense to do an IPO if you’re only going to raise a small amount,” she said.

Two weeks ago, software developer Ripple E-Business International Inc. conducted a P20 million IPO, the first since San Miguel Brewery Inc. raised P25 billion in May 12 last year.

Analysts say this doesn’t mean that firms are expanding any less but that companies are re-channeling their focus on other less volatile sources. 

As such, firms seeking to raise funds have avoided the equity market, opting instead to tap the debt instruments which are seen as less volatile. Analysts for their part see this trend continuing until the end of the year and new IPOs will only happen six months to one year after perceived sustainable recovery has occurred. 

(As published in BusinessMirror Online, 14 September 2009)