Intermediaries to opportunities

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IHAP induction of 2018 officers and directors

By Bjorn Biel M. BeltranSpecial Features Writer

From beginning operations in 1974, the nonstock nonprofit group Investment House Association of the Philippines (IHAP) has been furthering the development of the country’s capital market by promoting a better understanding of the role and functions of investment houses.

The contributions of such investment houses, which are duly licensed enterprises authorized to underwrite financial securities of corporations as well as the government, play a large part in the growth of Philippine business and the economy. Members and fellows of IHAP, which have grown to include more than 30 investment houses and related enterprises over the years, provide financial and advisory services to corporations doing business in the country, syndication of term financing, and underwriting of both debt and equity securities, among other things.

This year, a new roster of officers will be taking charge of IHAP’s duties, led by RCBC Capital Corp. President and Chief Executive Officer Jose Luis F. Gomez. Under Mr. Gomez’s leadership, IHAP is looking to increase its involvement in more important and relevant activities to further promote and contribute to the Philippines’ rapid pace of economic development.

In an interview with BusinessWorld, Mr. Gomez said that he believes that a favorable and likely prosperous future awaits the country, and IHAP is ready to do its part to achieve it. Investment houses, he said, while generally low-key in nature, play a crucial part in the growth of a country’s capital market by providing financial services to corporations wishing to raise capital. With more businesses having access to funding, the greater the contributions they can make to move the economy forward.

“Our role really is to act as intermediaries for institutions that want to access capital by raising equity or borrowing in order to fund their expansion plans, working capital requirements, etc. One of the roles we play is as financial advisors to companies to give them sound advice on the best way to access capital. We guide them in order for them to be able to do this in the most efficient and least costly manner,” Mr. Gomez said.

“The more issuers you have, the better, because it deepens and widens the capital markets. It also provides investors, both retail and institutional, with a means to invest their savings and excess funds in potentially more productive enterprises.”

And there is a lot of demand for it lately. The Philippines as an emerging market is drawing attention from all over the globe as an investment destination, and many businesses from various industries, particularly from the power and infrastructure sectors, are looking to locate here.

“A lot of the transactions, at least the ones we were involved in lately, have to do with power and infrastructure. It’s what the country needs right now,” Mr. Gomez said.

“To me, it’s a sign of development. One, we’re addressing a need for funding; two, there are people who would like to make investments. Matching the two ultimately results in moving our economy forward. Lately, a lot of our activities have been focused on power, specifically renewable energy, and infrastructure.”

In general, the future looks positive, Mr. Gomez said. He also noted that there remains significant interest from foreign investors who perceive the country as one of the few remaining economies which present substantial growth opportunities and higher financial returns.

“We remain to be one of the economies with a lot of growth potential. We’re still very attractive to foreigners when it comes to making investments in the Philippines. It looks pretty rosy, at least in the near term,” he said.

Mr. Gomez recalled the very positive reaction of the IHAP members when Finance Secretary Carlos Dominguez, who inducted IHAP’s new batch of officers, discussed the Philippine government’s plans and achievements.

“It seems that the plans and achievements of the government are very positive for the economy, and we wanted to be involved as a group. We told the Secretary that we were supportive, and we wanted to get involved in any way that we can in order to further these plans of the government,” he said.