Converge ICT pursuing IPO in Philippines despite risks

Converge ICT pursuing IPO in Philippines despite risks

Filipino fibre broadband provider Converge ICT Solutions has filed for an IPO of up to 35.92 billion pesos ($725 million) on the country’s stock exchange.

Reuters reports that the firm is angling for approval to sell 1.496 billion shares at a maximum price of 24 pesos ($0.48). Currently slated for October, the IPO would be the second in the Philippines this year.

Converge ICT is predominantly present in Manila, with around 750,000 subscribers in the capital and its metropolitan area. The markets have been unstable during the Covid-19 pandemic but given the resulting shift towards home working and education, the firm is hoping for a spike in demand for broadband and eCommerce.

The Philippines enacted a strict lockdown to contain the spread of Covid-19, but currently has over 40,000 cases. Despite a gradual relaxation of these measures, many workplaces remain closed and the country’s president has stated that schools will not reopen until a vaccine is available, meaning that e-learning is the only option for many students.

While the IPO as it stands could be the largest ever held in the Philippines, the country has a track record of overvaluing prices in regulatory filings, and the planned number of shares to be offered could be significantly reduced. Converge ICT has stated that it will use funds from the IPO to build a $1.8 billion backbone network to deploy nationwide affordable fibre internet.

Last year saw many firms in Southeast Asia raising funds through IPOs, but the market instability of 2020 has deterred investors, lowering market valuations and prompting companies to put their plans on ice. The Philippines’ stock exchange has seen the region’s weakest performance, with a stock index drop of 18% year-on-year.

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