Converge ICT gets global names to back IPO; cuts offer size | Inquirer Business

Converge ICT gets global names to back IPO; cuts offer size

/ 03:59 AM October 06, 2020

Broadband services provider Converge ICT Solutions Inc. cut the size of its initial public offe­ring (IPO) on Monday after winning commitments from global investors, including one of Canada’s largest pension funds, to back its debut share sale this month.

Converge ICT is now poised to raise as much as P32.9 billion after it reduced the maximum offer price to P19 per share from P24 per share, according to its latest prospectus to investors.

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Price adjustments are typical and take into consideration investors’ appetite amid a global health crisis roiling financial markets worldwide. The final IPO pricing date was moved to Oct. 8 this year while the domestic offer will run from Oct. 12-16.

It plans to list on the Philippine Stock Exchange on Oct. 26 under the trading symbol “CNVRG.”

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At the top price, Converge ICT could still launch the country’s biggest IPO since Robinsons Retail Holdings Inc.’s public debut in 2013.

So far, Converge ICT has secured commitments from so-called cornerstone investors, who would comprise about a third of the massive share sale.

These include Ontario, Canada-based OMERS Administration Corp., a leading pension fund with $109 billion in net assets of as end-2019.

It is joined by global investors such as Macquarie Funds Management Hong Kong Ltd., Genesis Investment Management LLP, Ghisallo Master Fund LP, Magna New Frontiers Fund, Oaks Emerging and Frontier Opportunities Fund, Segantii Asia-Pacific Equity Multi-Strategy Fund, and Thornburg Investment Management Inc.

The presence of cornerstone investors, usually large institutional funds, can raise the profile of an IPO especially during volatile periods. Unlike other investor classes, their early commitment to participate means they get a guaranteed allocation of shares.

Converge ICT and its owners led by founder and CEO Dennis Anthony H. Uy and US private equity firm Warburg Pincus are selling a total of 1.73 billion shares, including overallotments.

Of these, 480.84 million are considered primary shares, meaning proceeds will go to the company. After the price cut, Converge ICT expects to raise over P9 billion from the IPO.

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Minus fees and expen­ses, the company will end with P8.47 billion, which it plans to use for expansion and for the completion of a nationwide internet backbone by 2021.

Meanwhile, Uy and Warburg Pincus are set to raise up to P23.7 billion based on the maximum share price and the exercise of 225.79-million overallotment shares.

Converge ICT is setting aside some P30 billion in capital spending until 2021. This would be partly supported by additional bank loans, its prospectus showed.

It 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. INQ

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