Broadband company Converge ICT Solutions Inc. is beefing up its war chest with a multibillion-peso investment from United States-based private equity firm Warburg Pincus.
Inquirer sources said Warburg Pincus, which has been increasing its exposure in the region, would invest about $250 million (P12.8 billion) in Converge ICT, led by Pampanga-based businessman Dennis Anthony H. Uy.
Other details were not available and the parties were made to sign confidentiality agreements, one source said. Uy did not immediately respond to a request for comment.
The fresh funds will support Converge ICT’s ongoing plans to roll out fixed high-speed internet across the Philippines—a $1.8-billion initiative that was launched in August last year.
The company is aiming to become a major player in the country’s still-nascent fiber business, with earlier estimates pegging nationwide penetration at just 5 percent.
Since last year, Converge ICT had signaled its willingness to raise funds from a host of sources, including the sale of equity and debt, given the scale of its expansion plans.
One source said this showed Uy’s commitment to growing the company, which was once an acquisition target of telco giant PLDT Inc. in a deal that never materialized.
Fiber cables are costly and time consuming to roll out. However, Uy said during an interview last November that the business was feasible provided the right technology and techniques were used.
For Converge ICT, its subsidiary MetroWorks ICT Construction Inc. lays down fiber using microtrenching, which it claims is less disruptive than the traditional “open trench” approach.
Converge ICT is building infrastructure along with partners KT Corp. of South Korea and LSI-Fibernet Konstruk Corp., a Filipino-Korean venture.
By the end of its five-year plan, Converge ICT hopes to capture a market share of 40 percent of the 22 million households across the country.
The investment in Converge ICT comes at a time when global funds are seeking a wider footprint in the region.
Warburg Pincus announced last June 26 that it closed a $4.25-billion fund that would invest in China and Southeast Asia. The company said the fund would focus on a wide range of sectors from consumer and healthcare to property and technology.
Last year, US fund KKR, International Finance Corp. and China’s Tencent Holdings invested in PLDT-backed Voyager Innovations, the developer of the PayMaya digital wallet.