Converge to raise ₱36 B in IPO

Converge Information and Communications Technology Solutions, Inc., a broadband Internet service provider with operations mainly in Metro Manila, is planning an initial public offering (IPO) worth up to ₱35.9 billion in October this year.

Documents filed with the Securities and Exchange Commission showed that the firm is planning to offer up to 1.3 billion shares (Firm shares) with an over allotment option of up to 195.19 million shares at an offer price of up to ₱24 per share.

The offer shares consist of 415.68 million primary shares and up to 885.61 million secondary shares. The over allotment option will also come from the selling shareholders Comclark Network and Technology Corporation and Coherent Cloud Investments B. V. controlled by founder Dennis Anthony H. Uy.

Up to 70 percent or 910.91 million of the Firm shares will be allotted for the institutional offer overseas and in the Philippines while 30 percent of 390.39 million will be sold through the Philippine Stock Exchange’s trading participants (20 percent) and its local small investor program

(10 percent).

Converge has tapped Morgan Stanley Asia (Singapore) Pte. and UBS AG Singapore Branch to be the joint global coordinators and joint bookrunners while BPI Capital Corporation will be the local coordinator. BPI Capital and BDO Capital & Investment Corporation will acts the joint local underwriter and bookrunners.

The firm hopes to price the offer by October 9, 2020 with the offer running from October 13 to 19, 2020. Listing is targeted for October 26.

Proceeds from the primary portion of the IPO will be used primarily for capital expenditures for its planned nationwide fiber network expansion.

The bulk (65 percent) will be for investments on outside plant equipment, non-electric powered network equipment, including domestic backbone, distribution networks and access to international networks.

It is also allotting 15 percent of proceeds for inside plant equipment and electric-powered network equipment while 10 percent will be for investments in other property, plant and equipment and software.

The remaining 10 percent will be used for general corporate purposes, including working capital requirements.

Known as the challenger to the dominance of PLDT and Globe Telecom, Converge claims to be “the largest high-speed fixed broadband operator in the Philippines, by high-speed residential fixed broadband subscriptions, with a 54 percent share as of March 31, 2020.”

In 2019, the firm started expanding its network outside Luzon and hopes to substantially complete its primary nationwide backbone loop and connect Luzon, Visayas and Mindanao by the end of 2021.