Warburg-backed Converge ICT Prices PH IPO, Trims Target To $600m

Converge ICT Solutions, a Warburg Pincus-backed fibre-optic broadband services in the Philippines, has trimmed its initial public offering (IPO) target to about $600 million after pricing its shares at 16.80 pesos ($0.35) each, according to its filing Friday.

The price is near the bottom of the indicative price range of 16.50 pesos to 19 pesos that the company set on Monday. It looks to sell 1.73 billion shares, including an overallotment option. The offer period will run from October 13 to 19. Converge initially set an $857-million target for the listing.

The $600-million target will be the second-largest ever in the country, next only to the $627 million raised by Robinsons Retail Holdings Inc in 2013. The Philippine Stock Exchange had given its approval for Converge’s IPO last week.

In the disclosure, Converge said the maximum subscription amount for local small investors who will participate in the IPO is set at 1 million pesos ($20,700) per investor.

Converge intends to use the net proceeds from the offering primarily for capital expenditures requirements to accelerate its nationwide fiber network rollout and other general corporate purposes.

The company has 750,000 residential customers mostly in and around the capital Manila. 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.

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.

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.