Warburg Pincus stands to reap 3x its investment in CNVRG

Warburg Pincus, through Coherent Cloud, in September 2019 invested U.S.$225,000,000 in CNVRG, all of which have now been invested.

Warburg Pincus did not just bring capital

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.

Warburg Pincus is an ideal strategic and financial partner for management based on, among others, (i) its extensive experience investing in technology, media, and telecommunications (TMT) businesses; (ii) their long-standing presence in China, India, Southeast Asia, and other emerging markets; and (iii) their flexible, long-term, and growth-oriented investment approach. 

Since it investments in CNVRG, Warburg Pincus has been involved in CNVRG business across multiple fronts, including among others, assisting with strategic planning, KPI tracking, management incentivization, talent engagement, financing and capital market planning, IT and business process optimization, and corporate governance. Warburg Pincus’ investment has enabled CNVRG to significantly accelerate its business plan.

Warburg Pincus reaps returns

Assuming no over allotment option is exercised, Warburg Pincus will be selling 828,022,678 CNVRG shares at 16.8 a share at the public offering giving it a windfall of13.9 Billion Pesos or US $286 Million.  That cash proceeds alone is already a 27% gain on its 2019 US$225 Million investment in CNVRG .  Warburg Pincus’ remaining CNVRG shares of 1,217,431,841 (assuming no over allotment option is exercised) at 16.8 a share is valued at 20.5 Billion Pesos or US$420 Million.  In total Warburg Pincus will stand to reap US $706 Million from CNVRG.  That would be more than 3x the investment of US $225 Million.  In little more than a year it translated its investment in CNVRG from $225 Million to $706 Million.

The cash proceeds alone of selling CNVRG shares at the public offering effectively cashed out Warburg Pincus’ original investment in CNVRG of $225 Million.  Warburg Pincus is cashing out its investments in CNVRG 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.

Disclaimer and Disclosure: This is an independent analysis for discussion purposes with the aim of giving stock traders and investors an independent view point. Accuretti Systems Inc. in the course of day to day trading may have own, or is considering buying or disposing, the shares of the companies mentioned in this commentary.

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