Last year was not the best of times for Asia’s equity capital markets, with initial public offerings in the doldrums as aggressive rate hikes raised funding costs while the performance of secondary stock markets remained lacklustre for the most part.
In the Philippines, at least seven companies delisted from the Philippine Stock Exchange (PSE), four of which did so voluntarily. This is a notable change, as there were no voluntary delistings in the country in 2021 and 2022, according to PSE data.
The four companies that voluntarily delisted last year were Holcim Philippines, Inc. (HPI), on November 27; Metro Pacific Investments Corporation (MPIC), on October 9; 2GO Group Inc., on July 17; and Eagle Cement Corporation, on February 28.
Cement maker HPI, a member of the Holcim Group – one of the world’s largest suppliers of cement, concrete, and other construction-related services – delisted as part of the company’s commitment to containing corporate costs and reducing administrative burdens for the benefit of all stakeholders, especially its retail shareholders, according to the company’s announcement.
The decision came after two rounds of tender offers by Holderfin B.V., a financial services company based in the Netherlands, which reduced its public float to just 1.42%.
On the other hand, MPIC, an integrated infrastructure company chaired by local businessman Manuel Pangilinan, decided to go private because of its undervalued share price.
“The bidders believe that the intrinsic value of MPIC’s core investments in Philippine infrastructure has not been fully reflected in MPIC’s share price for some time,” according to a joint statement by First Pacific, GT Capital, and Mitsui. “The tender offer and successful delisting will allow MPIC’s minority shareholders to realize a significant premium over the historical share prices of MPIC.”
A bidder consortium formed by First Pacific (48.2%), GT Capital Holdings (20%), Mitsui & Co and Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development (11.3%), and MIG Holdings (5.7%) now owns a total of 85.2% of MPIC following the delisting. Philippine pension fund Government Service Insurance System also increased its stake in MPIC from 3.3% to 12%. The free float was reduced from 36.5% to 2.7%.
The entry of Mitsui into MPIC as a strategic partner could potentially result in access to new technologies, expertise, and networks, helping the Philippine firm expand its businesses and improve operational efficiency.
Looking ahead, a potential Federal Reserve rate cut could ease the pressure on companies to raise funds and spur more capital market activities.
Former Philippine finance secretary Benjamin Diokno has said the central bank may cut its benchmark interest rate by as much as 100 basis points this year if inflation cools to within the monetary authority’s target.
