Converge Information and Communications Technology Solutions, Inc. (Converge) and its shareholders are raising 25.3 Billion Pesos in the Philippines biggest Initial public offering (IPO) since Cemex Holdings Philippines’ (CHP) blockbuster IPO. The Converge IPO is said to be priced at 16.8 Pesos a share.
Converge Information and Communications Technology Solutions, Inc. was founded by the Filipino-Chinese businessman Dennis Anthony Uy with funding and support from Warburg Pincus.
Warburg Pincus is a leading global private equity firm focused on growth investing. The firm has more than $56 Billion in private equity assets under management. Warburg Pincus is an experienced partner to management teams seeking to build durable companies with sustainable value.
The IPO attracted the following big name foreign institutional investors/funds: Genesis Investment Management, LLP, Ghisallo Master Fund LP, Macquarie Funds Management Hong Kong Limited (acting on behalf of certain investment funds), Magna New Frontiers Fund, Oaks Emerging and Frontier Opportunities Fund, OMERS Administration Corporation, Segantii AsiaPacific Equity Multi-Strategy Fund and Thornburg Investment Management, Inc. (acting on behalf of certain investment companies and funds)
Of the 25.3 Billion Pesos proceeds only around 8.1 Billion Pesos will accrue to Converge as the rest will go to the selling shareholders including Warburg Pincus.
After the IPO, Uy family’s Comclark Network and Technology Corp. will have 63.8% of the company, while Warburg Pincus will have 16.2% if the over allotment option isn’t exercised. If the over allotment is exercised Warburg Pincus shares will be reduced to 13.8%. The IPO effectively allows Warburg Pincus to partially exit its investment in Converge.
Warburg Pincus is partially exiting its investment in Converge, as China Telecom backed Dito Telecommunity, the designated third telco by the government, is rolling out fast its network and building up fast its capacities ahead of its expected launch early next year. The Dito launch is set to disrupt the telco landscape in the country.
By selling shares in the public offering (without overallotment), Warburg Pincus will be able to raise US $286 Million that is 27% more than its investment of US $225 Million effectively cashing out its investment in Converge while still leaving shares valued at around US$420 Million.
Warburg Pincus didn’t become a leading global private equity firm for nothing. It has mastered well when to invest and when to exit.
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