To ease IPO process, PSE relaxes minimum float

March 20, 2025 | 12:00am

MANILA, Philippines — The Philippine Stock Exchange Inc. (PSE) has relaxed the minimum public float requirement for large offerings in a bid to make it easier for these companies to decide to proceed with their initial public offerings (IPOs).

PSE president and CEO Ramon Monzon said the exchange was able to secure approval from the Securities and Exchange Commission (SEC) to allow companies that want to offer P5 billion or more to offer less than the 20 percent public float requirement for IPOs.

“They can offer 15 percent, with the commitment that they will do a follow-on offering or a private placement in the next two or three years to comply with the 20 percent requirement,” he said.

Monzon said the exemption is currently in effect and companies that want to do an IPO are informed by the PSE about it.

“Basically, I told the SEC, with the liquidity problems we’re having in the market now, companies are having a hard time deciding on an IPO because of their inability or fear that they cannot meet the 20 percent public float. So I said, are you OK if we reduce the public float to 15, with the condition that, you know, we will have the company do a follow-on offering or even a private placement in the next two or three years to be able to meet the five or four or three percent that they did not meet so they can still comply with the 20,” he said.

Monzon said the exemption is being undertaken to make it easier for companies to make their decision to do an IPO.

He said it would have a two-year window, which could be extended again after the two-year period.

“While the PSE is a rule-based organization, there are rules that govern the IPO requirements. The PSE is not really dogmatic about those rules. When I say dogmatic, I mean if there are companies that want to list, but for one reason or another are not able to comply with some of the requirements, we listen to them. And if we feel that their reason is reasonable, we start a dialogue with the SEC,” Monzon said.

He said the potential IPO of GCash could qualify for the exemption.

The GCash IPO is among the most anticipated this year, with the company reportedly aiming for at least $8 billion in valuation.

“GCash I think is a different animal because for them, it’s not a question of having a difficult time offering the 20 percent, but they’re saying it’s too big for the market to absorb,” Monzon said.

“So if they’re going to get an exemptive relief for a lower public float, I don’t think there will be a requirement to do a follow-on. But like I told GCash, in the end, you have to address the index issue. Because you cannot be in the index if you’re below 20 percent. So let’s stake it step by step first. Let’s get the IPO out of the way,” he said.

China Bank Capital Corp. managing director Juan Paolo Colet said that the new rule granting public float flexibility for large IPOs may factor into the decision-making of certain IPO candidates, particularly companies that find it challenging to meet the 20 percent threshold.

“Perhaps this will finally persuade GCash to list on the PSE this year,” Colet said.

“However, it’s important to keep in mind that the public float requirement is not the only consideration of companies that want to do an IPO. They also look at investor sentiment, market liquidity, listing costs and regulatory obligations, which are in turn tied to other factors. So there is still a lot more that can be done to reinvigorate our stock market,” he said.