PSE temporarily bars companies from listing by introduction

The Philippine Stock Exchange (PSE) has temporarily blocked companies from listing by introduction. No explanation was given for the suspension, but the move came as share prices of firms that had taken this route — listing stocks without necessarily selling these to the public — recently skyrocketed. In a memo dated February 18, the PSE said its board, following a meeting the previous day, had decided to shelve relevant provisions in its revised listing rules. New applications will not be accepted but the bourse said listing applications already in the pipeline will continue to be processed. The rules on listing by way of introduction, which allows a firm to join the PSE without having to sell shares to the public immediately, were implemented in 2003. The PSE itself listed by introduction that year. Companies that adopt this tack have a year to sell shares to the public. Several firms that did so recently, however, have seen dramatic increases in their share prices, raising concerns that a loophole was being used to drive up valuations. For example, IPE-Game Ventures, Inc., the online gaming arm of listed information technology company IPVG Corp., listed on February 17 at P50 apiece, but saw its share price hit P115 last Friday. Listed companies, including those listed by introduction, are generally perceived to have higher governance standards, which add value to these firms. "Good thing they suspended it (the rules) because it is confusing for the investors," said Regina Capital Development Corp. analyst Claire S. Quiray in a telephone interview on Sunday. "I think it is giving an impression to the public that there is price manipulation because only a few hold the shares," she said in Filipino. Joseph Y. Roxas, president of Eagle Equities, Inc., concurred. "It is fine to list companies but you have to balance that with protection [of] the investing public [by ensuring] that prices are not manipulated," he said. Since last year, four companies have listed by introduction, with only information technology company Ripple E-Business International, Inc. opting to go public outright. Nickel miner Century Peak Metals Holdings Corp. closed last Friday at P3.40, up from P1 when it listed in October last year. Integrated Microelectronics, Inc., (IMI) meanwhile, is now worth P16.50 from its listing price of P6.20. On the other hand, Agricultural company AgriNurture, Inc. has seen its share price drop. Its shares closed at P16.25 apiece on Friday from P23.50 when the firm listed in May last year. IPE-Game, Century Peak, and IMI officials were not immediately available for comment, but AgriNurture President and CEO Antonio L. Tiu, in a telephone interview, said: "Supply is less than the demand so prices increase rapidly." — BusinessWorld