By Denise A. Valdez, Senior Reporter
CONVERGE ICT Solutions, Inc. has trimmed the maximum share price for its planned initial public offering (IPO) this month to generate a maximum of P32.89 billion.
The fiber internet provider, which was initially poised to offer its shares at a maximum price of P24 each, has reduced its indicative offer to a maximum of P19 per share, after signing agreements with eight foreign investors.
With the adjustment, the company may raise up to P32.89 billion from the IPO, down 21% from the original P41.55 billion, but still marking the Philippines’ largest IPO to date.
In its updated prospectus as of Monday, the fiber internet provider said it allocated about 33.6% to 38.6% of its offer shares to cornerstone investors.
Cornerstone investors are groups that pre-commit to subscribe to a company’s shares ahead of its IPO.
Converge has signed cornerstone investment agreements with eight foreign groups, namely: Genesis Investment Management, LLP (England); Ghisallo Master Fund LP (Cayman Islands); Macquarie Funds Management Hong Kong Ltd. (Hong Kong); Magna New Frontiers Fund (Ireland); Oaks Emerging and Frontier Opportunities Fund (Ireland); OMERS Administration Corp. (Canada); Segantii Asia-Pacific Equity Multi-Strategy Fund (Cayman Islands); and Thornburg Investment Management, Inc. (United States).
“Concurrently with and as part of the institutional offer, (each cornerstone investor) has entered into a cornerstone investment agreement with the company… to purchase offer shares from the company and the selling shareholders at the offer price,” Converge said.
If the over-allotment option is fully exercised, the shares allotted to cornerstone investors would take up approximately 33.6% of Converge’s offer shares. Otherwise, it’s equivalent to approximately 38.6% of the offer shares.
“Cornerstone investors will not be subject to a lock-up requirement on the cornerstone shares,” the prospectus said.
Converge is eyeing to offer up to 1.51 billion shares composed of 480.84 million shares for the primary offering and 1.02 billion shares for the secondary offering, with an over-allotment option of up to 225.79 million shares.
The company targets to finalize the price of its shares on Oct. 8, open the offer period from Oct. 12 to 16, and list at the Philippine Stock Exchange’s main board on Oct. 26.
Converge intends to use the proceeds from its IPO to expand its nationwide coverage. Its internet services are currently limited to Luzon.
The company has engaged with Morgan Stanley Asia (Singapore) Pte. and UBS AG Singapore Branch to be joint global coordinators and bookrunners for the offering. Credit Suisse (Singapore) Ltd. and Merrill Lynch (Singapore) Pte. Ltd. are the international joint bookrunners.
For local investors, Converge tapped BPI Capital Corp. as the sole local coordinator, and with BDO Capital & Investment Corp., as the joint local underwriters and bookrunners.
Other local participating underwriters are Asia United Bank Corp., First Metro Investment Corp., Maybank ATR Kim Eng Capital Partners, Inc., PNB Capital and Investment Corp., and RCBC Capital Corp.
Converge is owned by Pampanga-based businessman Dennis Anthony H. Uy, and has received a $225-million equity funding from US-based private equity firm Warburg Pincus last year.
Its income grew 45% to P1.26 billion in the first half of 2020, as its revenues rose 65% to P6.49 billion with the increased demand for internet services during the past months.