With last hurdle passed, Converge ICT sets out for Oct. 27 public debut
The Philippine Stock Exchange (PSE) approved the public debut of Converge ICT Solutions Inc., which would become the country’s third-largest internet provider by market value and propel founder Dennis Anthony H. Uy of Pampanga to dollar-billionaire status.
Coming in the middle of a global health crisis that has boosted demand for online services, Converge ICT’s initial public offering (IPO) could be worth as much as P41.5 billion at the maximum offer price, making it the largest ever in the Philippines.
A PSE public notice posted on Thursday showed Converge ICT’s owners, led by Uy and US private equity firm Warburg Pincus, were selling at least 20 percent of the company to investors from Oct. 13-19.
Converge ICT is targeting to launch its trading debut on Oct. 27 this year. It would be the second IPO in 2020 after MerryMart Consumer Corp., a grocery store chain owned by businessman Edgar “Injap” Sia II.
The final IPO price would be set on Oct. 9 this year, the PSE notice showed.
So far, the price is pegged at the maximum of P24 per share, which would value 100 percent of Converge ICT at P180.6 billion—or behind telecommunications giants PLDT Inc. (P289.5 billion) and Globe Telecom (P280.2 billion).
Converge ICT is focused on providing fiber internet services, a vastly underserved segment given challenges in providing fixed internet across the Philippines. Fiber had a penetration of just 7 percent as of end-2019.
Within this market, Converge ICT is the leading fixed broadband operator in the Philippines, capturing a market share of 55 percent as of June 30 this year, according to its latest investor prospectus.
The company ended the first semester of 2020 with over 730,000 subscribers, nearly double the comparable figure last year due to the surge in demand amid the COVID-19 pandemic.
The IPO would also provide a windfall for Uy and Warburg Pincus, which entered Converge ICT last year via a $225-million investment.
Based on the total offer of 1.73 billion shares, over 70 percent are secondary shares, meaning the money goes to the sellers. The secondary sale is valued at over P30 billion at the maximum price of P24 per share.
The primary offer, the proceeds of which would go to the company, amounts to 480.84 million shares or P11.5 billion. This would be used by Converge ICT to finance its expansion and the completion of a nationwide internet backbone by 2021.
Converge ICT has hired a host of local and international banks to handle the IPO, the bulk of which is expected to be taken up by overseas investors.
The list of banks included Morgan Stanley Asia (Singapore) Pte., UBS AG Singapore Branch, Credit Suisse (Singapore) Ltd. and Merrill Lynch (Singapore) Pte. Ltd.
The local banks are BPI Capital Corp., BDO Capital & Investment Corp., Asia United Bank Corp., First Metro Investment Corp., Maybank ATR Kim Eng Capital Partners, Inc., PNB Capital and Investment Corp., and RCBC Capital Corp.
