The Exchange, with the help of the Securities and Exchange Commission, is exploring the lowering of the 20 percent public float requirement for initial public offerings (IPOs), Monzon told InsiderPH.
This is because of GCash’s large size. At an estimated IPO valuation of about P465 billion, the company would need to raise P90 billion, eclipsing record holder Monde Nissin, which raised nearly P56 billion in 2021.
“I’ve been talking to GCash and Ayala because one concern is this might be too big for our market,” Monzon said.
“They’re asking me if I’m prepared to reduce the required float of 20 percent. I said I’m not dogmatic about the 20 percent,” Monzon said.
Jaw-dropping value
The potential GCash valuation would make the company bigger than the market capitlization of Globe (P314 billion) and Ayala Corp. (P380 billion).
When it compared to banks, it would be worth more than the country’s No. 2 lender, Metropolitan Bank & Trust Co. (P344 billion).
Last year, GCash saw the entry of two Japanese strategic investors, Mitsubishi UFJ Financial and Mitsubishi Corp., which valued the company at $5 billion (P290 billion).
Big picture
GCash, now the country’s fourth-largest financial institution after major banks, has indicated its readiness for an IPO but remains undecided on a launch date amid challenging market conditions.
Backed by Globe, Ayala, China’s Ant Group, and private equity investors, GCash boasts over 90 million domestic users.
Apart from payments, the financial technology darling serves as a gateway for loans, stock investments, and savings, mainly targeting the vast unbanked sector in the Philippines.
Thinking outside the box
Based on the current rules, IPO candidates should sell at least 20 percent of their shares when listing. Most listed companies must also maintain a public float, or the portion of shares held by non-owners or major shareholders, of at least 10 percent.
For IPOs raising over P5 billion, Monzon revealed they can actually sell just 15 percent to the public, then raise the remaining 5 percent in the next 2-3 years.
For larger IPOs like GCash, Monzon noted that an SEC exemption could allow selling below 15 percent while meeting the 10 percent minimum float requirement, without mandating a follow-on share offering.
Exemptions offered to recent IPOs
Monzon said a recent IPO that could have tapped this requirement was tycoon Edgar Saavedra’s Citicore Renewable Energy Corp., which raised P5.3 billion last June.
The company eventually decided an exemption was not needed thanks to the participation of the United Kingdom’s Mobilist program, which Monzon helped facilitate.
“We have to look for ways to address these so-called market conditions [otherwise] it becomes a self-fulfilling prophecy,” Monzon said.
When asked about the risks of being too flexible, Monzon emphasized balance, stating that while the PSE supports issuers’ needs, it also has a key responsibility to develop Philippine capital markets to serve broader economic and investor interests.
“If you’re going to list that much [it’s justified]. It’s not just for GCash but other big ones,” Monzon said.
Deal expert says clear justification needed
Juan Paolo Colet of China Bank Capital said there must be “clear and compelling” reasons for exemptions to the minimum public ownership rule (MPO).
“Granting a special exemption from the MPO rule for new listings can be double-edged. On the one hand, it may facilitate the kind of IPOs for which the 20 percent public float requirement is a serious hurdle or showstopper,” Colet said.
“On the other hand, it may detract from the objectives of the 20 percent MPO rule, such as ensuring large and dispersed share ownership. The reasons for granting exemptive relief should be clear and compelling,” he added.
What’s next?
It was previously reported that GCash plans to list in the second half of 2025 and will opt for an exclusive PSE listing over a dual Philippines-US IPO.
While there’s a lot of uncertainty around the timing of this deal, Monzon feels it is getting close.
“I think it will happen this year,” he said.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
