Converge readies for P29-B debut after bagging big overseas support

Broadband services provider Converge ICT Solutions Inc. begins the local sale of its massive initial public offering (IPO) next week after completing an overseas offer that was “oversubscribed” by global investment funds.

Riding on strong demand for internet as businesses and schools were forced to go online due to the pandemic, Converge is moving forward with the local leg of its IPO from Oct. 12-16 after finalizing the offer price at P16.80 per share.

At that price, Converge is poised to raise as much as P29 billion, including shares set aside for overallotments.

Converge will begin trading on the Philippine Stock Exchange on Oct. 26 under the symbol “CNVRG.”

It priced the offer near the bottom of an indicative range that went as high as P19 per share.

Several analysts expected a price cut, citing the volatile financial markets and prospects in Converge’s primary fiber internet business as rivals PLDT Inc. and Globe Telecom accelerate their own investments in fixed broadband.

Even then, Converge will be valued at P126 billion, making it the third largest internet company in the Philippines after PLDT and Globe.

“Converge’s investment story resonated strongly with investors given the very high demand for connectivity especially during the pandemic,” Lauro Baja III, head of Asia-Pacific global capital markets at UBS, which helped arrange the global share sale.

Baja said the internatio­nal offer was “well oversubscribed” with 80 percent of the shares allocated to long-term emerging market funds and sovereign wealth funds.

There were no further details on the investors but a source with knowledge of the matter said the IPO lured global names such as United States-based BlackRock Inc., one of the world’s largest asset managers, Fidelity Investments and Singapore’s GIC.

Converge’s IPO is set to be the biggest in the Philippines after the Gokongwei family’s Robinsons Retail Holdings raised P28.1 billion in 2013.

Founded by Pampanga-based businessman Dennis Anthony H. Uy, the company expects gross proceeds of P8 billion to partly finance its nationwide expansion.

The rest of the money will be raised from shares sold by Uy and Warburg Pincus, the US private equity firm that entered Converge in 2019 via a $225-million investment.

Converge nearly doubled its subscribers to 730,000 during the first semester of 2020. Its existing fiber optic footprint spans 35,000 kilometers.

The company 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 investor prospectus.