PSPC to IPO in September to avoid Ghost Month?

James Ryan Jonas

Those waiting for a new Initial Public Offering (IPO) are in for a disappointment now that the planned IPO of a semiconductor company, originally slated this June, will be postponed to a later date.

IPO Details

ipo-initial-public-offeringPhoenix Semiconductor Philippines Corp. (PSPC), makers of semiconductor and memory devices which count tech giant Samsung Electronics as one of its primary customers, was set to issue shares to the public for the first time this month, but the IPO was pushed back after the Securities and Exchange Commission (SEC) gave approval to the transaction only this week.

PSPC’s offer period was originally scheduled from June 16 to June 20. Its shares were supposed to start trading in the Philippine Stock Exchange tomorrow, June 27. (See Semiconductor firm PSPC plans IPO in June)

The company expects to raise up to P2.7 billion from the transaction. It will issue up to 706.82 million shares at a maximum price of P3.76 per share.

The IPO shares consist of 286.09 million primary and 286.09 million secondary shares held by majority shareholder STS Semiconductor & Telecommunications Co. Ltd. There is an overallotment of 134.63 million shares in case of strong demand.

Expansion Plans

PSPC’s IPO prospectus shows that majority of the proceeds will be used to “enhance the production facility through the acquisition of machines for existing production lines and building improvement.”

The company also plans to construct a new production facility within its 15-hectare area property at the Clark Freeport Zone in Pampanga.

A news article from Interaksyon reported that the IPO issue manager and underwriter, BDO Capital & Investment Corp., is currently requesting for an extension of the IPO timeline since it might “hit ghost month and our investors don’t generally like to invest that time,” according to BDO Capital President Ed Francisco.

August Ghost Month

The Ghost Month is a Chinese belief that ghosts and spirits of the dead roam freely in the world of the living and that during this month, people should avoid making important decisions because it could bring bad luck.

The 7th month in the lunar calendar is considered the Ghost Month, which typically falls in the month of August in the Gregorian calendar.

The peak of the Ghost Month is the Ghost Day or the Ghost Festival, which is the 15th day of the seventh month. This year, the Ghost Festival falls on August 10, 2014.

Citing investors’ lackluster activity during the August Ghost Month, underwriter BDO Capital said they are requesting that the PSPC IPO be deferred to September.

4th Company to go public

Phoenix Semiconductor Philippines Corp. (PSPC) is a company engaged in the manufacture, assembly, test and warehousing of memory chips and devices for computers, laptops and servers, as well as micro SD cards for mobile phones.

It started commercial operations in the Philippines on February 2011, and currently has a contract to supply parts to Samsung Electronics, guaranteeing an average monthly sales of US$17.4 million.

In its fiscal year ending February 2014, PSPC booked Net Income amounting to $3.03 million, reversing a Net Loss of $489,408 incurred in 2013.

If the IPO pushes through, PSPC will be the fourth company to go public in the PSE in 2014. Earlier this year, property development firm DoubleDragon Properties Corp. (DD) and tuna maker Century Pacific Foods Inc. (CNPF) both conducted Initial Public Offerings.

Top Frontier Holdings Corp. (TFHI) also went public in January but the route of listing by way of introduction.

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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.