AG Finance (AGF) IPO: Stock rises on market debut

James Ryan Jonas

A micro-finance company quietly debuted on the Philippine Stock Exchange on August 13, with its stock price slightly increasing by 0.92% versus its IPO price.

AG Finance  Inc. (stock code: AGF), the third company to conduct an Initial Public Offering (IPO) this year, is in the business of providing consumer loans, particularly to Overseas Filipino Workers (OFW) and salaried employees.

Tuesday, August 13, was AGF’s first listing and trading day in the PSE and the stock closed at P2.20 per share. That translated to a 0.92% increase from its offer price of P2.18.

On August 14, its second trading day, the stock ended up 2.73% to close at P2.26. Volume turnover was pegged at 2.49 million shares, down from the first trading day’s volume activity of 5.61 million shares.

Today, August 15, AGF rose another 6.19%, closing at P2.40 per share. Total volume traded was 2.78 million shares.

After today’s trading, the stock’s 3-day gain from its IPO price is 10.09%.

The company listed a total of 261.82 million shares in the first board of the PSE, including 68.074 million shares sold to institutional investors during  its IPO offer period which ran from July 30 to August 5.

The company raised more than P148 million from the IPO.

According to the company, proceeds will be used to expand its loan portfolio offered to OFWs and repay its P37 million debt to China Banking Corp.

AG Finance currently books a loan portfolio amounting to P259.6 million from around 4,300 retail clients. It plans to increase the number of borrowers to 5,100 before the end of the year.

Its loan portfolio is 85%-90% comprised of OFW loans, which typically range from P50,000 and above, payable from 12 to 18 months. The rest of the loan portfolio is Salary loans offered to salaried employees in the Philippines, which range from P10,000 to P50,000 payable in over a year via salary deduction.

According to the company, the average loan amount is P60,000 charged a 3% interest per month.

In the first half of 2013, AGF’s net income doubled to P34.1 million from last year. The company targets an annual 20%-30% increase in earnings.

AG Finance is the third company to complete an IPO and the fourth to be listed in the PSE this year. Earlier in 2013, Philippine Business Bank (PBB) and Asia United Bank (AUB) conducted their initial public offering, while Del Monte Pacific Ltd (DMPL) listed on the PSE by way of introduction.

Property developer and leisure company Discovery World initially planned to conduct an IPO and list its shares on August 29, but the company announced it is deferring its IPO date to a later date while awaiting business transactions that will have “a material positive impact on the company, its business and future prospects.”

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James Ryan Jonas teaches business management, investments, and entrepreneurship at the University of the Philippines (UP). He is also the Executive Director of UP Provident Fund Inc., managing and investing P3.2 Billion ($56.4 Million) worth of retirement funds on behalf of thousands of UP employees.