DFNN.com bookbuilding attracts existing shareholders

The PhilippinesÆ first IPO in over a year is set to test interest in tech stocks.
With the peso hitting record lows and the ongoing hostage saga there has been a lot of bad news coming from the Philippines recently. Hoping to buck that trend and breathe some life into the country’s capital markets, Diversified Financial News Network (DFNN.com) plans to sell shares next month in the Philippine’s first IPO since June 1999.

DFNN.com operates a financial information portal as well as offering online banking and brokerage solutions to companies that wish to outsource their technology operations. It is looking to list on the second board of the Philippine Stock Exchange (PSE) next month by selling 14.9 million shares at between 10 and 20 pesos each. CEO Ramon Garcia, Jr says this represents about a quarter of the company, so if it prices at the upper range it could give the company a valuation of around $28 million.

Bookbuilding began this week and Garcia says he expects the deal to be priced in the middle of next week. The sale is being arranged by AB Capital and Investment, Orion-Square Capital and Amalgamated Investment Bancorporation.

“Existing shareholders in the company want to add to their portfolio,” says Garcia on the reaction so far. “This is a good sign, as it shows they’re in for the long haul.”

Proceeds from the sale will be used to fund installation of what Garcia describes as “a parallel ATM network” of kiosks that will operate on a TCP/IP protocol. DFNN.com plans to offer this network to banks and/or brokers in need of new channels for product delivery.

The company is the Philippine’s only application service provider (ASP) and currently has 17 Philippine brokers and one Thai broker using its hosted online trading solution.Garcia says he expects to have two or three brokers signed up in Indonesia by the end of the year. DFNN.com is also working in the area of integrated settlement between brokers and banks.

In response to criticism that the timing for an IPO is bad because of the Philippine’s flat capital markets, Garcia says that it’s not really a need for funds driving the IPO plans, but publicity. And being the first IPO in the Philippines since Chinatrust (Philippines) Commercial Bank in June 1999, DFNN.com is guaranteed some exposure. As a result of the attention, the sale’s performance will not only reflect on perception of the country’s capital market, but also on the maturity of the Philippine technology sector.

Garcia says that recent relaxing of listing rules by the PSE has made it easier for entrepreneurs to get the funding and exposure that comes with a public listing. But he admits that there is still a way to go in improving regulations in the Philippines. Besides being CEO of DFNN.com, Garcia also sits on the board of governors at the PSE.

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