Converge eyes MSCI Index inclusion

CONVERGE ICT Solutions, Inc. on Monday said its shareholder, Coherent Cloud Investments, B.V., sold 420 million shares for P30 each, a move seen to bring the listed company closer to the MSCI Index.

The transaction, which reduced Coherent Cloud’s interest in Converge to 10.25% from 15.83%, increased the Dennis Anthony H. Uy-led company’s public float, or shares that can be publicly traded and are unrestricted, from 20.4% to 26%.

Coherent Cloud is owned by US private equity firm Warburg Pincus.

This puts Converge “in a stronger position to be included in the MSCI Index at the upcoming index reviews,” Converge Co-Founder and President Maria Grace Y. Uy said at a virtual briefing.

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said the MSCI index is a gauge “very much followed” by the global investment community.

“So, a stock’s inclusion in the said index may boost sentiment towards it,” he said in a phone message.

Inclusion in the MSCI “will allow for increased exposure to global funds and, consequently, higher value turnover for the stock,” Regina Capital Development Corp. Equity Analyst Anna Corenne M. Agravio said by phone.

Converge Chief Financial Office Advisor Matthias Vukovich said the increased free float will allow the company to fulfill the different criteria for MSCI Index inclusion, “which includes the value of the free float and the percentage of the free float.”

The 420 million shares account for about 5.6% of the company’s outstanding common shares.

“Now, with our investible market cap increased by 5.6%, we believe that it will significantly improve our trading liquidity, allowing for greater investor participation and trading of our stocks,” Mr. Vukovich said.

For her part, Ms. Uy said: “There was strong reception from high quality investors (global and domestic) that enabled us to increase the base size of the transaction and accommodate the robust investor interest.”

Converge’s attributable net income for the first nine months of the year went up by 137% to P5.20 billion from P2.19 billion in the same period in 2020.

January-to-September revenues increased by 76% to P18.83 billion from P10.68 billion last year.

Converge ICT shares closed 1.44% lower at P30.80 apiece on Monday.