Broadband firm Converge ICT sets record IPO amid pandemic

MANILA, Philippines — Fiber optic broadband services provider Converge ICT Solutions Inc. is embarking in the Philippines’ biggest initial public offering in history at the most unlikely time of a pandemic.

In a filing prospectus shared by the Securities and Exchange Commission on Friday, the company said it plans to raise P35.9 billion in fresh capital by selling 1.496 billion shares for P24 apiece.

The Warburg Pincus-backed company’s stock market debut is targeted to happen this year. The plan was first reported by Bloomberg, which said that based on its record, the company’s IPO would be the biggest ever for the Philippines.

Converge ICT’s listing would be the second for this year after grocer Merry Mart Consumer Corp. raised P1.6 billion last month just when the economy has started reopening from a three-month enhanced community quarantine (ECQ) in Luzon that started mid-March.

Despite tempered investor sentiment because of the outbreak, Luis Limlingan of Manila-based brokerage firm Regina Capital said investor demand for Converge ICT’s shares would really depend on its final offer price.

“Everyone is a buyer at a right price pandemic aside,” Limlingan said in a text message.

That said, Converge ICT sounded optimistic on its IPO prospects, citing a surge in demand for its main fixed broadband business as a result of work-from-home arrangements forced by the contagious coronavirus disease-2019 (COVID-19) across industries.

“Demand for fixed broadband in the Philippines has accelerated with the onset of COVID-19, as work from home arrangements and social distancing became the ‘new normal,’” Converge ICT said.

“Since the implementation of the ECQ, we have entered into multiple contracts with leading BPO customers to provide connectivity to the homes of their employees in order to address permanent or long-term WFH status,” it added.

According to the prospectus, approximately 90% of proceeds from the maiden share offering will fund Converge ICT’s capital expenditures to accelerate the firm’s nationwide fiber network rollout. The balance of 10% will be earmarked for general corporate purposes.

Converge ICT’s fiber network is still limited to Luzon, but at the height of ECQ in May, the company registered a record-high of 50,000 new gross residential subscribers.

The company is expanding its domestic internet backbone to include Visayas and Mindanao in hopes to achieve nationwide coverage by 2021.