Warburg-backed Converge ICT Gets Regulator Nod For PHs Biggest IPO At $857m

The Philippine Stock Exchange (PSE) has given its approval for the initial public offering (IPO) of Converge ICT Solutions, a Warburg Pincus-backed fiber-optic broadband services provider in the country.

The approval paves the way for what can be the Philippines’ biggest IPO, with Converge offering 1.73 billion shares, including the overallotment option of as much as 225.79 million shares, at 24 pesos each for a total of 41.52 billion pesos ($856.97 million).

The company is set to release the final offer price on October 9 while the IPO is targeted to run from October 13 to 19, according to the prospectus released Thursday. 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.

The exchange’s approval of the public offering and listing of the company’s shares is subject to its compliance with all of the post-approval conditions and requirements of the exchange, the PSE said in a notice.

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.

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.