Profriends prefers straight IPO listings

While mass housing developer Profriends Group Inc. seemed to be having a hard time getting regulatory approval for the planned P7.7-billion initial public offering, one of its underwriters would still not recommend that the company go through backdoor listing.

BDO Capital & Investments Corp. president Eduardo Francisco said he was not a believer of backdoor listing, especially for a company like Profriends, which has a legitimate business.

Francisco said it was more expensive for a company to list through the backdoor. For instance, acquiring a listed shell company now costs at least P300 million and another P50 million would be needed to inject assets into the shell company.

In a straight IPO, a company would only need to spend six to seven percent of the expected proceeds from the IPO. This means for a P1-billion IPO, a company planning to go public would need to spend only P70 million.

While there are also legitimate companies going through backdoor listing, Francisco said he still preferred a straight IPO, especially if a company had a good story to tell.

Profriends initially planned to list its shares with the stock exchange through backdoor listing via AsiaTrust Development Bank. Talks, however, did not push through.
Source: Manila Standard