The Market Monitor Minding the Nation's Business
Dubbed as the Supplemental Listing and Disclosure Rules Applicable to a Public-Private Partnership Company, this new Philippine Stock Exchange product was launched on the trading floor with PPP Center led by its Executive Director Ferdinand A. Pecson, who rang the bell, signaling the opening of the PPP securities to investors.
With the supplemental listing and disclosure rules in place, a PPP company may apply for listing under the guidelines if it is a corporation with a PPP contract awarded or a Special Purpose Company (SPC) incorporated by the corporation or consortium holding a PPP contract. These companies are exempted from the minimum 3-year track record and operating history required by the PSE to list in its main board. The awarded PPP contracts should have at least a project cost worth Php5 billion. The company can only apply for listing when it has completed its construction works or a phase in the project. The life of the listed company is considered co-terminus with the project concession period, but with a minimum contract of 15 years.
Pecson explained that as the PPP program continues to rollout infrastructure projects of increasing scale and complexity, it is anticipated that the local banking sector will be entirely unable to absorb or support the demand for funding of PPP projects. In 2015, the PPP Center together with the PSE and the Securities and Exchange Commission (SEC) embarked on several initiatives that assessed the Philippine capital market for PPPs.
“Accessing the capital markets through the listing of equities and issuance of bonds are some of the financing options currently being explored to address this funding issue,” Pecson said.
“We expect a large number of infrastructure projects to be rolled out in the next few years. We actually see local banks spreading their lending services more widely among PPP parties/players. There is also an increased likelihood of conglomerates tapping into foreign banks and the capital market to fund large-scale PPP projects,” he added.
For his part, PSE Chairman Jose T. Pardo conveyed his confidence in the new listing product for PPPs.
“As you know, other territories have had this fund raising mechanism for some time. While we are only catching up, the timing is also ideal given government’s stance on PPP projects, as it committed to accelerate infrastructure spending. And with several PPP projects in the pipeline, we hope to see PPP companies tap the stock market for their capital raising exercise,” the PSE chair said.
In a separate briefing on the PPP listing rules, a panel discussion was conducted with PPP Center Deputy Executive Director (DED) Eleazar E. Ricote, PSE Chief Operating Officer (COO) Roel Refran, and Securities and Exchange Director Vicente Graciano Felizmenio, Jr., of the Markets and Securities Regulation Department as resource persons. Members from the banking industry, construction and other PPP players were present during the briefing.
“It is our hope that this framework will encourage eligible PPP companies to tap the financial markets, and broaden the investor base, allowing more people to pool their resources towards the successful operations and maintenance of PPP projects,” Ricote said.
PSE president Hans Sicat Hans expressed his optimism for the upcoming PPP listing applications.
“We agreed to help facilitate the process of listing applications under the PPP listing program. We hope that this initiative will further help PPP companies in terms of their view on listing on the PSE,” he said.
