GCash not going public for now

The Ayala Group’s Globe Telecom and Chinese billionaire Jack Ma are prepared to keep their fintech gold mine, GCash, private for a longer period of time, with prominent investors willing to bankroll its expansion at lofty valuations.

Earlier this month, GCash’s parent firm Mynt secured a $300-million investment from US private equity firm Warburg Pincus, Insight Partners and existing shareholders in a deal that valued the mobile wallet at over $2 billion.

Signaling a longer wait for a GCash initial public offering (IPO), Globe CEO Ernest Cu said the recent fundraising allowed the company to scale up its business within the country’s vast unbanked segment.

“So far, right now, I think staying private is good,” Cu told reporters at a recent briefing.

“We can raise all the capital we need. Attracting world-class investors will also probably give us the seal of approval as the definitive fintech investment in the country,” he added.

Martha Sazon, president and CEO of Mynt, said at the same briefing there was “no timetable” for an IPO.

“Our focus really is to create more value by growing GCash further,” she said.

P3.5-T gross transaction

Sazon said GCash was poised to hit P3.5 trillion in gross transaction volume in 2021 after breaking past its earlier target of P3 trillion—three times the volume recorded in 2020.

The company, which has over 51 million registered users, had also succeeded in shifting users to money-making services, allowing it to achieve four-straight months of profitability as of September this year.

According to Sazon, 82 percent of GCash users had availed of revenue-driving applications from 75 percent a year ago.

“GCash is now one of the very few fintech companies in the world that has proven that it can make money,” she said.

With payments at its core, GCash also provides services such as digital lending, savings, insurance and investments. Its GCredit service alone has disbursed over P21 billion in loans, Sazon said.

The COVID-19 pandemic has pushed digital services and fintech into the mainstream and more investors are starting to take notice.

In an Aug. 23 report, stock brokerage house CLSA said GCash alone could reach gross transaction volumes of P17 trillion by 2025, taking into account the “hyper-growth” phase of the mobile wallet.

CLSA expects GCash and its competitors to further diversify their services outside payments as adoption grows.

“Monetization is still tilted towards payments, but accelerating usage from noncore use cases such as e-commerce and financial services will drive further deep adoption within the app,” CLSA said in the report.