The Philippines’ Biggest IPO Since 2016 Raises $523 Million

(Bloomberg) - Converge Information and Communications Technology Solutions Inc. and its shareholders raised pesos 25.3 billion ($ 523 million) in the Philippines' largest initial public offering in four years.
This is even the case when the Warburg Pincus-backed broadband operator fixed 1.51 billion shares at a price of 16.8 pesos apiece. That revealed a stock market filing filed on Friday that was close to the low end of its marketed range of 16.5 pesos to 19 pesos. Approximately 68% of the offer consisted of existing shares in the Converge ICT founders and Warburg Pincus.
The low-end pricing was a "surprise" considering the IPO went well, said Gerard Abad, chief investment officer at AB Capital & Investment Corp. “Maybe the demand is exactly right and you couldn't miss the opportunity to get a price (IPO at 16.8 Peso each) with a lucky number. "
Eight is considered a lucky number in China, and Converge - the largest and fastest growing high-speed fixed line broadband operator in the Philippines - was founded by Filipino Chinese spouses Dennis Anthony Uy and Maria Grace Uy. After the sale, Comclark Network and Technology Corp. The Uy family will hold 63.8% of the company, while Warburg Pincus will hold 16.2% if the overall allotment option is not exercised.
The stock is scheduled to start trading in Manila on October 26th.
"Less expensive"
At $ 523 million, Converge's IPO is the largest in the Philippines since CEMEX Holdings Philippines Inc.'s share sale of $ 539 million in 2016. A third of the proceeds will go to Converge, which will use it to fund investments and accelerate it its fiber will contribute network rollout across the country according to the prospectus filed with the Philippine Stock Exchange.
According to analysts, the pricing near the lower end has also helped the business attract more interest.
This pricing "makes the stock cheaper," said Japhet Tantiangco, analyst at PhilStocks Financial Inc. At 16.80 pesos, the stock is valued at 54.7 times its estimated earnings for 2020, compared to 61.8 times on upper end. The Philippine stock market is trading at 20.85 this year.
Converge benefited from the increased use of the internet during the Covid-19 pandemic, as most of the country worked or studied from home. The company's profit for the first half of 2020 rose 53% year over year to 1.26 billion pesos, while sales rose 65% to 6.49 billion pesos. According to the prospectus, private subscribers reached 750,000 in June.
The offering attracted eight major investors, including Genesis Investment and Ghisallo Master Fund. Morgan Stanley, UBS Group AG, BDO Capital & Investment Corp. and BPI Capital Corp. are the international and local arrangers of the sale.
(Recast throughout.)
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