The Hidden Risks of Investing in Philippine IPOs—Should You Buy at Launch?

The Philippine Stock Exchange saw only three initial public offerings in 2024, raising a combined P11.86 billion — a fraction of the P40 billion target the exchange had set at the start of that year. For investors watching the 2025 pipeline, which includes marquee names like GCash and Maynilad, the temptation to buy in at launch is understandable. But the gap between what an IPO promises and what it delivers is often wider than it first appears.

That 2024 tally — three IPOs totaling P11.86 billion — looks even smaller when placed beside the Southeast Asian IPO market’s 2024 performance, which raised $3 billion in the first ten months, down from $5.8 billion in the same period of 2023. The region saw 122 IPOs in that window, compared to 163 the year before. High interest rates early in 2024, stock market volatility, and uncertainty around US elections all discouraged companies from listing. The Philippines was hit especially hard: consumer firms delivered the worst earnings due to high inflation, and property firms struggled after the ban on Philippine offshore gaming operators reduced demand and raised vacancy rates. The PSE index itself fell roughly 12% over two months, settling near the bottom of its earlier climb.

What an IPO Actually Is — and What It Isn’t

An IPO is not a single thing — it’s a blend of primary and secondary shares, and the mix matters. When a company like GCash, whose parent Mynt plans to raise up to ₱92.3 billion (about $1.5 billion) by selling shares at up to ₱10 apiece, structures most of its offering as secondary shares, the message is different from an IPO where the company itself is raising capital to build something new. The distinction is often lost in the hype, but it directly affects what happens to your money after you buy.

Why Buying at Launch Carries Hidden Costs

The most common assumption about IPOs is that the listing price is a good deal — that the company is offering shares at a discount to attract investors, and that the price will rise once the market opens. This is sometimes true, but the evidence from the Philippine market is mixed. The 2025 IPO market outlook from Rappler notes that the market index has been oscillating between 6,450 support and 6,750 resistance, and that market transactions revolve around a few stocks, keeping rallies limited and gains spread across the board. In a thin market, a large IPO can overwhelm demand and push the stock down after listing.

The GCash IPO, if it pushes through in the second half of 2025, would eclipse Monde Nissin’s 2021 IPO as the largest ever on the PSE. But size is a double-edged sword. Some analysts describe it as a potential “SpaceX moment” for the Philippine stock market, capable of reigniting investor interest. Others point out that the sheer volume of shares — roughly 80% secondary — poses a liquidity risk for the market to absorb without significant price volatility after listing. When most of the shares being sold are coming from existing shareholders who want to exit, the supply pressure is real.

Beyond the share structure, the broader market environment matters. The BSP cut overnight borrowing rates three times in 2024, totaling 75 basis points, bringing rates to 5.75%, with analysts expecting three more quarter-point cuts in 2025. Falling interest rates are generally good for stocks, especially REITs and high-dividend plays. But the Rappler analysis outlines three scenarios for the PSE index in 2025: a bear case at 6,600, a base case at 7,600, and a bull case at 8,600. The team leans toward the base case, but the range is wide enough that IPO buyers could see their shares trade below the offer price for months or years if the market lands on the bear end.

Fine Print That Changes the Deal

Lock-Up Periods and Post-IPO Drops

Early investors and company insiders are typically barred from selling their shares for a set period — usually 90 to 180 days — after the IPO. When that lock-up expires, a wave of selling can flood the market, depressing the stock price. Investors who bought at launch and held through the lock-up often find themselves underwater. The risk is higher when the IPO has a large secondary component, because those sellers are already motivated to exit.

Allocation Games — Retail Investors Get the Short End

In a hot IPO, institutional investors and high-net-worth individuals often get priority allocation. Retail investors may receive only a fraction of the shares they applied for, or none at all. By the time the stock starts trading on the open market, the initial pop has already happened — and the retail buyer who missed the allocation ends up buying at a premium on Day One, not the IPO price.

The “Sponsor” Overhang

Many Philippine companies that go public are family-owned or controlled by a single business group. The IPO often sells only a small minority stake, leaving the controlling family with the majority. This creates a governance dynamic where minority shareholders have limited influence. The Unicapital analysis notes that many Philippine firms, especially family-owned enterprises, struggle to unify diverse business units, formalize governance systems, and meet the transparency required of listed companies. An IPO doesn’t automatically fix that — it just adds public shareholders to the mix.

Market Timing — You Can’t Predict the Window

The PSE targeted six IPOs in early 2024 with a total equity deal of P40 billion. It got three IPOs raising P11.86 billion. SM Group’s real estate investment trust and Ayala-backed GCash both opted out of 2024 IPOs, citing unfavorable market conditions. If institutional players with deep market knowledge choose to wait, retail investors should ask why they shouldn’t do the same.

What to Do — Three Paths, Depending on Your Situation

If You’re a First-Time IPO Buyer

Treat the IPO as a learning position, not a big bet. Limit the amount you invest to what you can afford to lose, and read the final prospectus carefully — especially the sections on use of proceeds, risk factors, and the breakdown of primary vs. secondary shares. The Fitz Villafuerte analysis suggests one approach: buy into the IPO for possible quick gains, but limit the amount, and consider cost-averaging after the initial hype subsides.

If You’re a Long-Term Investor

Resist the FOMO. An IPO is just one day in a company’s life as a public entity. The stock will still be available to buy a month, a quarter, or a year after listing — often at a better price. The Rappler analysis recommends buying at current levels for a 12–24 month horizon, but that refers to the broader market, not IPOs specifically. For individual IPO stocks, waiting gives you the advantage of seeing how the market actually prices the company after the initial volatility settles.

If You’re Considering the GCash IPO Specifically

GCash has between 70 and 94 million users in a country of about 115 million people. Net profit grew from about ₱6.4 billion in 2023 to over ₱17 billion in 2025, a compound annual growth rate of almost 40%. Those are strong fundamentals. But the 80% secondary share component, the size of the raise relative to the market’s capacity, and the fact that rival Maya is reportedly planning its own public listing later in the year all add complexity. The debate, as the Fitz Villafuerte piece frames it, is whether investors are paying a fair price when most funds go to existing shareholders rather than to GCash for growth. Review the final prospectus when pricing is locked, and decide based on the numbers — not the hype.

Frequently Asked Questions

An IPO is a moment of transition, not a guarantee of returns. The companies that list in 2025 — GCash, Maynilad, Okada Manila, Top Line Business Development Corp. — are real businesses with real growth stories. But the structure of each deal, the timing of the market, and the motivations of the sellers all matter as much as the business itself. Read the prospectus. Understand the share breakdown. And if the hype is louder than the numbers, wait.

If this was useful, you might also want to read whether cryptocurrency is a gamble or a real opportunity for Filipino investors.

Sources

Sustainable investments for OFWs — A guide to aligning your portfolio with long-term, responsible growth strategies.

Common mistakes in protecting your finances — Practical advice for Filipino investors on avoiding costly pitfalls.

Analysis: 2025 IPO market outlook. Rappler.

2024 not a very good year for IPOs in PH. Inquirer.net.

GCash is going public — should you invest?. Fitz Villafuerte.

Firms should prepare early as PH IPO market stays muted. SunStar Cebu.