POLYTECHNIC UNIVERSITY OF THE PHILIPPINES 1

Name : Cj DC. Serna

Section : BSMA 4-3

ACTIVITY 4

1. Identity a company where you can initially invest in IPO

Upon checking the listing notices on the PSE EDGE website. Solar Philippines
Nueva Ecija Corporation is one of the company who undertakes initial public offering. The
company priced its initial public offering (IPO) at P1 per share to raise up to P2.7 billion to
work on the largest solar project in the world. This is the company that I want to have my
investment not only because the offer price is affordable but because of the potential growth.
Solar Philippines Nueva Ecija is owned by Leandro Leviste. It is the first company to IPO
under the PSE’s new relaxed rules for renewable energy companies that permit a company to
list without any operating history. In conclusion, with our crisis with regards to source of
energy, company like Solar Philippines Nueva Ecija Corporation is a great innovative
solutions that meet high standards of sustainability and profitability.

2. State the process in investing IPO

Anyone of legal age and capable of paying the minimum subscription amount within
the offer period that lasts five business days can participate in an initial public offering. The
first step in investing an IPO is finding an upcoming IPO by looking for a news from the
company that is about to go to public or by checking the listing notices on the PSE EDGE
website. Second step is to open a stock broker account. Sign up for an account with
stockbroker. The complete list of the stockbroker can be found on the PSE website, some of
it are COL Financial, BDO Securities, BPI Trade, or FirstMetroSec. Opening the account can
be done via online or by going to broker office physically. The requirements to open an
account are valid government-issued ID, tax identification number (TIN), and accomplished
account opening forms. Once approved the investor is required to fund the stock trading
account either by online banking or over-the-counter payment.
The last step will be to subscribe to an IPO. The investors can buy through online
broker or PSE Electronic Allocation System (PSE EASy). In buying through online broker.
The investor needs to log in to her stock brokerage account, click on a link for IPO
subscription to purchase, indicate the number of shares that want to obtain and is sufficient
enough with the account balance, place the order, and then wait for the IPO subscription to
be approved. Once it is approved, the IPO shares will be credited to your stock brokerage
account on the company’s listing date. On the other hand, the investor can buy through PSE
Easy as well. The investor needs to go to PSE Easy website or mobile app and click the
Register button to sign up for a PSE EASy account, fill out the online registration form,
select the stockbroker as trading participant, click the link on the email sent to you for your
account verification, wait for your broker to approve your PSE EASy registration. Once
 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES 2
approved you can already buy number of shares that you want to order using that PSE Easy
account.
In conclusion, buying an IPO stock is easier and less complicated than it seems. PSE
take advantage of our technology and make it convenient for investors to buy stocks by using
mobile application or website.

3. What are the benefits (return) and risk derived in investing IPO

There are several benefits derived in investing to an IPO. First is the opportunity to
increase wealth as the company you buy stocks with grows over time. Generally companies
sell their stocks to raise capital for business expansion and if the company succeed to obtain
it the investors will benefit from its success too. For example, you buy stocks now when the
company only have 10 branches in the Philippines however after 5 years the business
succeed to expand and from having 10 branches they now have 100 branch. The value of the
stocks increases and so the early investors have a gain as well. Second is maximize profit,
buying low and selling high is the biggest appeal of IPO investment. Third is achieve long
term financial goals, IPO stocks are suitable as long-term investments, if the company you
invested grows tremendously then the IPO investment can help the investor meet long-term
goals like buying a home or car, etc.

Not all IPO do well. In every investment there is always a risk. Some of the risk
derived in investing in IPO are when companies underperform after IPO, uncertainty
prospects, and supply of share after the lock up period that might cause the share prices to
decrease. A company holding an IPO may look promising in terms of future growth however
there are lots of uncertainty like competitors, covid 19, and law regulations that might cause
the company to fail in attaining its goal for future growth that is why unlike other investment
types, it’s harder to predict the chance of success in IPO investing especially when there is
not much information available about a company that is not listed yet, it has no stock trading
history and thus no data that is applicable for use to evaluate how an IPO stock will perform.
Furthermore, every IPO in the Philippines has a lock-up period of at least 180 days after the
listing date. During this period investors cannot sell their shares. They can only sell their
shares after the lock up period that sometimes cause excess supply of shares in the market
causing the prices to decrease.

In conclusion, before investing to an Initial public offering an investor must assess

benefits and risk to make sound decision. Understanding the risks of investing in an IPO will
be useful in formulating strategies to manage and protect the investment.