Converge ICT hires four banks to plan P35-b IPO

Fiber internet company Converge ICT Solutions Inc. hired four banks to arrange a P35-billion initial public offering this year, sources said Wednesday.

Banking sources confirmed a Bloomberg report that Converge ICT, which is owned by Pampanga-based businessman Dennis Anthony Uy, had tapped Bank of the Philippine Islands, BDO Unibank Inc., Morgan Stanley and UBS Group AG for the planned share sale.

Sources said the company would shortly file an IPO application with the Securities and Exchange Commission.

Converge ICT’s IPO could be the biggest share sale in the country since the maiden offering of Robinsons Retail Holdings Inc., which raised P28 billion in proceeds in 2013. Analysts said the Converge ICT IPO would enable it to raise fresh capital to aggressively finance expansion plans amid increased demand for faster internet as millions of people are working and learning from home because of the coronavirus pandemic.

Converge ICT took in United States-based Warburg Pincus, one of the world’s biggest private equity firms, as a minority investor through a $250-million equity investment last year.  The company plans to use proceeds from the equity investment to finance a $1.8-billion nationwide internet backbone.

The Philippine Stock Exchange said it was expecting more listings this year, including the country’s first Real Estate Investment Trust offering despite the current volatile trading conditions.

PSE president and chief executive Ramon Monzon said in a statement the successful IPO of MerryMart Consumer Corp. and the listing by way of introduction of Altus Property Ventures Inc. in June could boost capital activities in the market.

“Hopefully, these two new listings will help prop up trading activity even as we await the listing of the first REIT IPO,” Monzon said.

Ayala Land Inc. and DoubleDragon Properties Inc. earlier expressed plans to conduct REIT offerings this year.

Capital raised from the stock market in the first six months reached P20.83 billion, mainly from a follow-on offering, one stock rights offering and two private placements.

The daily average trading value turnover in the first half amounted to P6.59 billion, down 15.9 percent than the P7.84 billion average turnover in the same period last year.  

Foreign funds turned into net sellers of P68.44 billion in the first half, a sharp reversal from the P21.26-billion net foreign buying a year ago.

“Foreign funds have left emerging markets including the Philippines as a result of the health and economic crisis caused by COVID-19.  Even if there are attractive bargains in emerging markets, foreign institutional funds prefer to sit it out,” Monzon said.

“Fortunately, local investors readily took over the buying momentum and kept our market resilient. In April and June, we noted that locals were responsible for 53.0 percent and 58.9 percent of value turnover,” he said.

The 30-company Philippine Stock Exchange index dropped 20.6 percent in the first half to settle at 6,207.72 on June 30.  

“While the index may have recovered from oversold levels it has not been able to climb back to its pre-COVID-19 levels indicating that investors are still quite wary about the full impact of the virus on the economy and are concerned that the number of cases continue to increase despite the various community quarantine regimes we went through” Monzon said.