CTS Global aims to finance expansion via ₧1.37-B IPO

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Stock broker CTS Global Equity Group Inc. has filed for an initial public offering (IPO) that could raise P1.37 billion for its overseas expansion.

In the registration statement it filed with the Securities and Exchange Commission, the company, formerly known as Citisecurities Inc., will offer to the public some 1.37 billion in primary common shares at an indicative price of P1 apiece.

Its offer will begin on February 21 and its shares will be listed on the small, medium and emerging (SME) board of the Philippine Stock Exchange on March 9. Its shares will be traded under the ticker symbol CTS.

The company engaged SB Capital Investment Corp. as the issue manager, underwriter and bookrunner for the transaction.

CTS Global was established to engage in the business of equities trading. It uses its expertise to capitalize on opportunities on a local and global scale through trading of equities listed in various stock exchanges, its documents read. Currently, the company has a pool of over 30 individual traders who manage a combined capital amounting to P550 million.

Most of the proceeds of its IPO, or about P1.23 billion will be used to scale up it operations globally.

“For the past few years, the company has consistently generated profits from its assets under management but was not able to maximize its bottomline profit due to overhead expenses. As the traders scale their accounts using the existing strategy, the company’s overhead expenses will stay the same, giving a promising opportunity for its operating leverage,” it said.

“For the past decade, the company maintained its capital stock at P200 million, only raising it to P500 million in the last quarter of 2019 and an additional P50 million in 2020. A further increase in capital to be deployed in the global markets is the key to CTS Global taking it to the next level.”

It will allocate some P20 million to build the client accounts management segment and offer its services to interested clients as it hires more talent in the new departments and creates the client acquisition and support infrastructure. During the first few years in business, this segment will need the capital to fund the initial expansion in operation, it said.

The remaining balance of about P100 million will be used for general corporate purposes, such as any adjustments needed depending on the country’s pandemic recovery. This may be in the form of developing the company-owned office space to the extent necessary or further improvements in the digital systems for the work-from-home arrangement.