Sat, Jul 20, 2019 - Page 12 News List

Companies raise less with SPOs in first half

UNCERTAINTY:Many firms said that they postponed raising capital, as they did not know if new investments would be a good idea in light of the US-China trade spat

By Kao Shih-ching  /  Staff reporter

In the first half of this year, local companies raised 16.52 percent less through secondary public offerings (SPO) than they did a year earlier, as trade tensions between the US and China have put a strain on new investments, the Financial Supervisory Commission (FSC) said on Thursday.

The NT$253.64 billion (US$8.17 billion) raised was the lowest in three years, compared with NT$271 billion in 2017 and NT$303 billion last year, FSC data showed.

An SPO is the sale of new shares by a company that has already made an initial public offering (IPO), Securities and Futures Bureau Deputy Director-General Tsai Li-ling (蔡麗玲) told a news conference.

The number of companies that conducted SPOs in the first six months dropped to 111, from 127 a year earlier, Tsai said, adding that 109 of the firms raised funds in Taiwan and two raised funds overseas.

The declines could be attributed to a higher comparison base last year, with Cathay Financial Holding Co (國泰金控) and Fubon Financial Holding Co (富邦金控) raising NT$42 billion and NT$40 billion last year respectively, she said.

More importantly, companies were being conservative due to the trade tensions, she said.

“Many companies told the Taiwan Stock Exchange that they held off raising new capital, as they were not sure whether to plan new investments with the trade war still affecting the global economy,” Tsai said.

In the first half of last year, 24 percent of companies conducted SPOs to raise funds for new investments, but the ratio plummeted to 4.71 percent this year, Tsai said, adding that funds raised for investment dropped from NT$69.1 billion to NT$11.9 billion.

Likewise, while 11 percent of companies raised capital to expand their production capacity in the first half of last year, 8.91 percent of companies did so this year, she said.

However, 60 percent of companies conducted SPOs to finance their debt — the most in past 10 years, Tsai said.

The amount of funds raised privately, such as through investments in private equity funds, declined to NT$18.8 billion from NT$42 billion a year earlier, but the FSC is not worried, as it does not encourage public companies to raise capital privately, Tsai said.

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