Converge down 9% on listing day

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    Converg e Information and Communications Technology Solutions Inc. (Converge ICT) closed at P15.22 on its listing day yesterday, down 9.4 percent from its initial public offering price of P16.80.

    The company sold to the public 1.5 billion primary and secondary shares covering the initial offer and another 225.79 million shares for the greenshoe option, raising for the company P29.1 billion ($600 million), in the largest-ever initial public offering in the Philippines, proceeds of which will be used to finance its capital expenditures in the next 18 months.

    The company said interest in the share sales was “overwhelming” with the domestic front attracting over P4.856 billion ($100 million) in demand.

    On the international front, the offer was well oversubscribed with eight globally recognized firms investing an aggregate amount of $225 million in Converge, covering approximately 40 percent of the base offering. Investments from long-only institutional investors also accounted for over 80 percent of the transaction.

    Traders were dissatisfied with the opening day performance of Converge ICT noting that while the facilitators claim an overwhelming interest for the IPO, its trading day shows otherwise.

    “There are just too many sellers below the IPO price,” said one trader who spoke on condition of anonymity.

    Aristotle Reyes, Jr., trading at UPCC Securities Corp., said Converge ICT’s IPO price is also expensive.

    “If we assume that Converge ICT’s earnings for first half is the same earnings for second half, which was reported at P1.26 billion, then you have P2.5 billion for the full year. And that’s basically around 50x PE at its IPO price,” he said.

    Luis Limlingan, managing director at Regina Capital Development Corp., said “short-term traders cashed out of converge shares as they speculated on the prospects of the country amid the pandemic.”

    “Many are debating as to how fast the company can meet its growth targets given effects of the lockdown,” he said.