Converge ICT, a Warburg Pincus-backed fiber-optic broadband services provider in the Philippines, on Friday filed for an initial public offering (IPO) of up to $725 million in what could be the largest listing in the country ever.
The company plans to sell 1.3 billion common shares with an overallotment option of 195 million common shares at a maximum price of 24 pesos ($0.48) per share, its filing with the Securities and Exchange Commission showed.
Converge ICT could raise as much as $725 million. The indicative offer period for the IPO is from October 13 to 19 and the target listing date is October 26. The listing would be the Philippines’ largest IPO, overtaking Pilipinas Shell Petroleum Corp’s $380.79 million share sale in October 2016.
Converge intends to use the net proceeds from the primary offer primarily for capital expenditures requirements to accelerate its nationwide fiber network rollout and other general corporate purposes.
While the coronavirus outbreak has affected most industries around the world, Converge ICT saw demand for fixed broadband in the Philippines accelerate with the onset of Covid-19. This, as work-from-home arrangements and social distancing, become the “new normal” in the country.
According to data cited by the company, an average household in the Philippines would require between 250 GB and 480 GB of data per month to function optimally under continuing work- and school-from-home arrangements.
According to Media Partners Asia, an independent provider of research, advisory, and consulting services in the Asia Pacific, internet usage among Filipinos also increased significantly across multiple use cases.
In May 2020, Converge acquired approximately 50,000 new residential subscribers, the highest monthly gross additions on record, compared to monthly new residential subscriptions of approximately 33,000 in each of January and February 2020.
In June 2020, Converge added approximately 60,000 new residential subscribers, exceeding the May 2020 record by 20 per cent.
American private equity giant Warburg Pincus is a minority shareholder in the company, having invested $225 million in July 2019. Warburg Pincus has a long track record of investing in the technology, media, and telecommunications sector, with select marque investments including Bharti/Airtel, Inexio, Ziggo, and Crowdstrike.
If the listing is approved, Converge’s IPO could help revive a weak public market in the Philippines. So far this year, the local bourse only hosted one IPO – grocer MerryMart Consumer Corp, which raised $31.5 million in May.
Last year, Metro Pacific canceled the listing of its hospital unit while consumer tech company Cal-Comp Technology delayed a proposed $125-million IPO, citing market conditions.
Founded in 2012 by businessman Dennis Uy, who is the current CEO, Converge ICT is the largest high-speed fixed broadband operator in the Philippines, with 54 per cent market share of high-speed residential fixed broadband subscriptions as of March 2020.