Converge’s Dennis Uy holds on to red-hot shares

Fiber internet tycoon Dennis Anthony Uy of Pampanga sees no reason to cash out and sell shares to accommodate strong investor interest in his company, Converge ICT Solutions Inc., after buyers snapped up a P12.6-billion block unloaded by its No. 2 stockholder last week.

Converge shareholder Coherent Cloud Investments B.V., controlled by US private equity firm Warburg Pincus, completed the sale of 420 million shares at P30 each on Friday, cutting its stake to 10.25 percent from 15.83 percent, a Philippine Stock Exchange filing showed on Monday.

In an interview, Uy said the sale was “well-received” by global and local investors, with demand for the shares overflowing 3.5 times.

But the businessman said he was not interested in selling his own shares and large investors seeking significant exposure in Converge would need to wait for Warburg to eventually unwind its remaining position.

“In due time, if there is a strategic partnership that will help the company and take it to the next level, I can offer [shares],” Uy, whose Comclark Network and Technology Corp. owns 64 percent of Converge, said on Monday.

“At this moment, we will grow the company. There are a lot of things to do and the market is so young,” he added.

Stronger position

Far from being an overhang on its share price, Uy said the transaction increased its public ownership to 26 percent from 20.4 percent, “putting Converge in a stronger position to be included in the MSCI index at the upcoming index reviews.”

Matthias Vukovich, Converge chief financial office advisor, said on Monday the block sale was increased in size given interest from buyers, reflecting strong demand for the company’s shares.

He noted the buyers were a mix of investors from Converge’s initial public offering (IPO) and new investors.

“They are, to a large extent, very long-only investors, including pension funds and insurance companies,” Vukovich added.

He said Warburg remained a significant shareholder that was “active day-to-day at the board level and operational level.”

Warburg entered Converge in 2019—a year before its IPO—via a $225-million (P11.4 billion) investment. It once owned as much as 29 percent of the broadband services provider.

Including the transaction last week, Warburg has pocketed about P26.94 billion from the sale of Converge’s shares.

The fund still owns 771.4 million Converge shares valued at P24 billion, based on the company’s closing price of P30.80 each on Monday.

Converge saw profits from January to September this year more than double to P5.2 billion as residential revenues jumped nearly 95 percent.

The company disclosed it would reach its target to cover 55 percent of households in the country by 2023, two years ahead of schedule. INQ