Local Small Investors Program Support Philnare IPO
April 27, 2007
The National Reinsurance of the Philippines or “PhilNaRe”
initial public offering (IPO) set for April 27 may be the
first listing in the Philippine Stock Exchange’s history
attributed to the overwhelming support of the local small
investor (LSI) program.
The PSE and the PhilNaRe IPO
team classify the local small investors as investors
purchasing not more than 6,000 shares (25,000 pesos
worth). Also, the issue manager according to the PSE
cannot refuse these LSI’s.
"These small investors are
what drove the impending PhilNaRe issue to over
subscription twelve times over encouraging us to exercise
its greenshoe option," says BDO Capital and Investment Corp.
President Ed Francisco.
“The greenshoe option allowed
the company to offer 103.9 million additional shares to the
public”, he added.
The majority of the LSI’s wanting to
invest in the company was patriotic and wanting to showcase
the abilities of the Filipino. According to a 32-year old
banking professional who was part of the many who waited in
line at the BDO branch in Makati said, “It is a rarity for an
opportunity such as this to present itself to the investing
public. Supporting a locally owned company with its plans to
expand and tackle the regional market is an investment I’m
willing to make. I’m all for highlighting the Filipino
ingenuity and if PhilNaRe is that company presently wanting to
be competitive globally, then so be it.”
investor program translated to a total investment in the area
of P 200 million representing an estimated 67 million shares.
This kind of support for a local IPO is astonishing.
PhilNaRe is looking to raise additional funds in the
amount of P 2.0-2.9 billion to be used to increase the
Company’s capital in order to have the capacity to retain more
premiums. This translates to an estimated net income of P627
million this year; a 50% gain from 2006 levels.
premiums are also forecasted to increase to P5.21 billion from
P3.88 billion in 2006, while investment and other income are
seen to hit the P506 million from a P343 million
PhilNaRe is the only reinsurance company in the
local market today and has the envious status of being the
national reinsurer. This status allows PhilNaRe to retain a
portion of the reinsurance business from the local insurance
industry. This captured market is made sure by Presidential
Decree 1270, which states that PhilNaRe is to retain a minimum
of ten percent of the local reinsurance
Moreover, PhilNaRe is making a commitment to
trail blaze the way for the local insurance market to
reeducate the investing public of the benefits of insurance
products as investment instruments.