(“Unlocking Philippine Value” was originally published on Keenan’s Substack. Read more of Keenan’s published work here.)
Recently, I have been getting a lot of questions from friends, investors and entrepreneurs whether we would ever go public. It’s an interesting question, and the capital markets is always on my mind as I build my business, but there are things that hold me back against this option.
For now, the short answer is no… At least not yet. The reason why (and what might eventually change my mind) is more complicated. It involves understanding the roadblocks within our own capital markets, particularly the Philippine Stock Exchange and the rules around foreign ownership.
Before I can explain why it isn’t an option for us yet, it makes sense to first explain why a company goes public in the first place.
Why do companies go public?
There are a couple of reasons:
- Raising capital for growth: they may need additional capital to supplement their growth initiatives, allows the company some short term runway to meet long term objectives. This involves hiring, investing in R&D, expanding into new markets and strengthening the balance sheet in the process (especially if the company has debt).
- Increase Liquidity: liquidity is just a fancy word for “being able to buy and sell your shares at ease with minimal effort between parties.” When you go public, your shares are floated so more people have the ability to buy into and out of your company. The pool of investors opens up. Founders and early shareholders get to cash out quickly.
- Gain Visibility and Credibility: There’s a common view that being public brings more recognition, which in turn builds trust and credibility with suppliers, customers, and talent. I would argue that this isn’t necessarily true. There are other large, successful groups that remain private to this day (Koch Industries, Cargill, and Bechtel in the U.S.; Mercury Drug, Chooks-to-Go, Andok’s, and others in the Philippines). That argument is for another day, but suffice it to say that credibility plays a big role.
- Valuation Uplift and Transparency: the idea that floating your stock so more people can come in and out means there are more “views” on your company, which which helps form a clearer sense of its valuation. Again, this is debatable, but at the end of the day, you buy and sell shares based on what the market wants. Otherwise, there would be no liquidity. This dynamic also tends to attract more institutional money.
- Corporate Governance and Discipline: Meeting the reporting requirements of the SEC means you need to follow a set of organizational rules. These rules are typically more stringent than staying private. But in theory, they add a layer of governance to your organization.
These are the main reasons, but there might be more outside of these and feel free to send me a message if you can think of more.
Number 4 is an interesting reason. In theory, when you go public, there is an increase in liquidity for your shares, and that in theory should improve the multiples paid for ownership in your company (your stock).
Better Transparency = Higher Liquidity = Stronger Multiples = Higher Share Price
In other words, the ultimate share price boils down to better transparency, which means stronger trust from outside investors.
Do companies end up achieving this in the Philippines?
The quick answer is not really. Well at least not enough.
Hong Kong is an outlier, as its multiples are trading at multi-year lows due to ongoing geopolitical uncertainty surrounding China. During the pre-China risk period (roughly 2009 to 2018), it traded between 14x and 18x. It is also considered a developed market, similar to Singapore, though both operate under different dynamics. Meanwhile, Vietnam, Thailand, and Indonesia all outperform the Philippines.
Why would I take our company public if (1) we don’t get the valuation it deserves, (2) liquidity is low, (3) we have to give up more ownership through dilution, and (4) we still need to meet stringent reporting requirements just to maintain listing?
So why is there a lack of trust in the Philippine stock market?
To answer this question, we have to look at foreign ownership restrictions and how they relate to the the retail sector.
Some Background
In the Philippines, the retail sector reached about $69.4 billion in 2024, and is expected to grow to $133.5 billion by 2033. That’s a 7.7% CAGR between 2025 – 2023. This is a huge market and makes up a chunk of our current GDP of $461.6 billion.
Despite this, the percentage of listings that fall under “Services” remains low at just 2–4% of total market capitalization. Retail is categorized under Services.
In developed and emerging markets alike, access to capital is the lifeblood of growth. Yet in the Philippines, the small-format retail sector with massive employment and consumption remains largely boxed out from capital markets. Because of an outdated foreign restriction rule called The Retail Trade Liberalization Act of 2000 (Republic Act No. 8762 (as amended by Republic Act No. 11595 (2021)). The requirement is for any foreign-owned (equal or more than 40% ownership) retailer to invest at least ₱10 million per store and ₱25 million in paid up capital.
The result? A private sector that refuses to list. And a generation of fast-growing consumer companies stuck in private mode.
So where are all the retail IPOs?
Visit any community mall, provincial highway, or food park and you’ll see vibrant Filipino retail concepts: quick service restaurants, convenience stores, regional food chains. Cebuana Lhuillier there, a Chooks-to-go here, Andok’s fried chicken, and then a few big pharmacy groups with small store formats. But very few are listed, yet they all make a lot of money, and are mostly family owned.
Even if these groups have national ambitions, these businesses don’t meet the arbitrary ₱10M per store capex threshold required to allow foreign ownership. And without foreign ownership, they won’t get the liquidity and multiples desired to justify a listing.
Restrictive foreign capital. No IPO demand. No liquidity. Low multiples.
Better Transparency = Higher Liquidity = Stronger Multiples = Higher Share Price
There are many factors that can drive company multiples, but a big one in the Philippines is the fact that foreign investors are boxed out, which creates a void in liquidity.
The companies that do list are either:
- Large conglomerates with slow growth, or
- Retailers that meet the capital bar but miss the innovation spark
Meanwhile, the actual growth is happening in unlisted, founder-led companies that stay private because it’s simply worth more to do so. Instead of focusing on valuation uplift and prospects of immediate liquidity, they focus on high growth, strong fundamentals, and compounding internal cash. I wrote about this in an article titled Brick by Brick.
Internal cash flows become the primary goal for these companies and their shareholders, who instead rely on avenues like dividends or reinvestment into future projects. In theory, this is where all value comes from anyway, so they prefer that over the alternative, which is listing at a poor valuation and giving up ownership in the process.
So why did the Philippines do this anyway? I believe it was to protect the small retail store owner. If you read the rules, you see conditions that protect small store owners. It seems the ₱10M per store rule was originally designed to protect small and medium enterprises (SMEs) from being overwhelmed by foreign competition. On paper, this makes sense. Preserve local businesses, shield mom-and-pop shops, and allow homegrown concepts to flourish without facing global players on day one.
In practice, the rule has had the opposite effect.
Instead, home grown concepts reach a liquidity crunch as they scale, and are forced to rely on franchising as a business model, or worse debt. For early-stage brick-and-mortar businesses, debt has become the go-to avenue for growth. At this level, it’s the wild west when it comes to terms and conditions.
Instead of creating space for small entrepreneurs, it has preserved market dominance for the large groups that can afford to build ₱10M+ store formats. Think of those with strong corporate infrastructure such as Jollibee, which has successfully expanded both locally and globally with full access to capital markets (but even their multiples are not ideal). Starbucks Philippines and McDonald’s Philippines can easily comply with such thresholds due to their large store formats.
These large-format operators can legally welcome foreign ownership, access institutional capital, and use scale to accelerate expansion because their stores can cost up to ₱10m to build. Meanwhile, smaller-format concepts who have hit a growth spurt and are in need of funding are legally barred from tapping foreign equity or listing their companies unless they accept an unattractive valuation along with high dilution. Not the best of paths.
Some of the fastest-growing food and retail brands remain private, despite strong scale, profitability, and brand awareness:
Potato Corner: Operates globally through franchising; recently acquired but still not publicly listed.
Andok’s: A household name in Filipino rotisserie chicken, with massive footprint and no public listing.
Chooks-to-Go: A vertically integrated roasted chicken chain with nationwide presence; remains private despite growth.
Mercury Drug: One of the largest pharmacy chains in the country; still privately held.
Minute Burger: A longstanding value burger chain with over a thousand stores nationwide; continues to scale privately through franchising.
Turks, Macau Imperial Tea, and Siomai King. All well-known brands with hundreds of locations, yet still prefer to remain private.
In contrast, the publicly listed players are:
Jollibee Foods Corporation (JFC): The exception that proves the rule, but now more exposed internationally than domestically.
Shakey’s Pizza (PIZZA): A successful listing but still trading at relatively low multiples.
MerryMart: A more recent IPO that still struggles to attract high institutional demand.
These examples show that public capital isn’t the default growth engine for local entrepreneurs anymore.
Let’s look at our neighbors…
Vietnam: Allows up to 100% foreign ownership in retail, including small-format chains.
Indonesia: Foreigners can own up to 67% in retail without stringent per-store investment minimums. These rules were relaxed in 2021.with many F&B concepts below 400sqm now allowed to be owned 100%.
Thailand: Allows high foreign equity participation in retail through Board of Investment (BOI) approvals and no fixed capex per store. This has led to regional expansion and listings of even mid-sized retail chains.
Philippines: Maintains a strict requirement of ₱10 million per store investment and ₱25 million minimum paid-up capital for full foreign ownership. Additionally, a constitutional foreign equity cap limits foreign ownership to 40% in small and medium enterprises that do not meet these capital thresholds.
In effect, small and even mid-sized chains with capital under ₱25M or stores under ₱10M in assets are barred from foreign participation, leaving them with few paths to raise growth capital outside of debt.
It’s no surprise that the Philippines is the most illiquid with the lowest multiples amongst our neighbors.
This then makes me question why franchising thrives in the Philippines. Some people have asked me if we plan to franchise, and when I tell them that we own all our stores and prefer it that way, I often get a blank look in response.
We live in a society ingrained in the franchise culture, mainly driven by a lack of capital options at the early stages for retail. It’s no coincidence that the Philippine Franchising Association expects 10% growth for the franchise industry this year with Php800 billion in expected revenues.
In the absence of public market access and foreign equity funding, Filipino entrepreneurs have turned to franchising as a capital-raising tool. And it works. Franchise fees and upfront investment from operators have allowed many small brands to scale.
Interestingly, foreign ownership restrictions don’t apply to franchisees. This legal workaround has helped fuel the growth of many homegrown brands without the need for capital.
But franchising isn’t a silver bullet. It works well for replicable business models and gives owners a high return-on-capital (being asset-light), but owners don’t benefit from the full upside of true ownership. Moreover, not all concepts are easily franchisable, and franchising can limit the flexibility needed to grow a national brand.
By relaxing foreign equity restrictions, we open up another path: one where entrepreneurs can attract strategic investors and institutional capital earlier in their lifecycle. This would expand growth options beyond franchising, and empower founders to scale that matches their speed and vision. This will enhance the Philippine entrepreneurial landscape and spillover to other sectors.
So what happens if this rule gets repealed or relaxed?
If the ₱10M per store rule were repealed, we could see:
- An increase in IPO activity from fast-growing food & retail companies who are already big and profitable but remain private.
- Expanded foreign investor access to high-growth small caps, which can increase our market cap.
- A re-rating of the Philippine market as liquidity and demand improve.
- Bridging trust between foreign investors and Philippine opportunities, potentially driving multiples upward for existing players in the market.
The Philippine Stock Exchange could be a serious consideration to those who otherwise would have remained private with strong private capital networks.
Now, I am not a capital markets expert. I do have experience in corporate finance, and I am an early-stage private markets investor, so there may be other arguments against this, and other reasons that explain our lackluster stock market.
But my desire to understand this is driven from the fact that a big portion of my wealth is from my shares in my own food retail business. This has forced me to assess these options and explain them to investors and friends, and it’s not an easy landscape to navigate.
I’m sharing this in the hope that we can give small, fast-growing companies a chance to shine in our emerging country through greater access to foreign capital. Doing so wouldn’t just benefit business owners, it would empower the government through job creation and other spillovers, and create long-term economic growth for the Philippines as a whole.
ABOUT THE AUTHOR
Keenan Ugarte is Managing Partner at DayOne Capital Ventures, an independent private holding company that invests in and builds high-growth, early-stage businesses that serve the underserved Philippine mass market.