A Philippine firm will be the first money transfer company to list on the local stock market this week, cashing in on a growing remittance business that shatters records year after year.
I-Remit Inc (iRemit), the largest Filipino-owned non-bank remittance company, debuts on October 17 and plans to use net proceeds of more than 475 million pesos ($10.8 million) to fund expansion in the United States, a major centre of expatriate Filipinos.
Although non-bank remittance firms have only around 5 percent of the market, iRemit's net income has doubled each year in the past three years as more Filipinos send money home through official channels rather than via friends and relatives.
"If the remittance trend is the same, we should continue to have the same growth, if not better," Chairman and CEO Bansan Choa said in an interview.
"That's the market you have to go into right now," Choa said of the remittance sector. "Our exports are not growing that much any more. Aside from the foreign exchange inflows going into the stock market, it's just the OFW remittances that is regular." Official remittances are expected to hit a fresh peak of $14 billion this year, beating last year's record of $12.8 billion, when the inflows accounted for over 10 percent of GDP.
The central bank has said the gap between total remittances and official remittances has narrowed, with total handouts just about 5 percent higher than the official number from 20 percent two years ago.
The decline is partly due to a drop in remittance fees as more non-bank money transfer firms set up shop and more banks open foreign offices to cater to Filipinos working overseas.