The possible lowering of the 20 percent IPO threshold—first reported by InsiderPH—still needs the final approval of the Philippine Stock Exchange (PSE) and Securities and Exchange Commission (SEC).
What was said
Cu, also the president and CEO of Globe, addressed the float issue during the telco giant’s earnings call on Friday.
“We remain very optimistic the PSE, the SEC will see that this IPO is quite unique in terms of its size, in terms of the interest of the public and the international investors, and that they will see things our way in terms of the need to look at this threshold that has been around for quite some time,” he said.
“And we believe it is quite rigid. And given where our market is at, I think it’s in the best interest of everyone that they consider the reduction in public float,” he added.
Big picture
GCash, whose major backers are Globe, the Ayala Group and China’s Ant Financial, could launch its IPO as early as the latter part of 2025.
One major concern is the current requirement to sell up to 20 percent to the public, which could be too large given challenging market conditions, amplified by market uncertainties following the election of US President Donald Trump.
GCash is worth about $5 billion following the entry of strategic Japanese investors, making it the country’s No. 4 most valuable financial institution in the Philippines.
For its IPO, the company is estimated to be worth $8 billion or more, meaning a 20-percent float would be worth around ₱90 billion, larger than the record held by Monde Nissin at ₱56 billion.
The worry is this might be too much for the market to absorb.
PSE “not dogmatic” about 20 percent rule
“I’ve been talking to GCash and Ayala because one concern is this might be too big for our market,” PSE president and CEO Ramon S. Monzon told InsiderPH in a previous interview.
“They’re asking me if I’m prepared to reduce the required float of 20 percent. I said I’m not dogmatic about the 20 percent,” he added.
During the interview, he also suggested the float, which ensures liquidity and diversified public holdings, could be lowered to 15 percent of below but still above 10 percent.
Analysts’s view: GCash IPO to boost market
“We express the same sentiment with regards to the lowering of float especially as the current valuation of GCash which would require it to raise P90 billion, it is far too large for our market to absorb,” Joey Cipres, AP Securities research analyst, told InsiderPH.
“Additionally, in the event that the IPO successfully proceeds, it could hopefully bring back some life to the bourse,” he added.
Growing profitability
GCash commands these robust valuation expectations due to its surging profitability and a growing user base of over 90 million.
Its contribution to Globe's earnings last year soared to ₱3.8 billion, up 59 percent from ₱2.4 billion in 2023. It now accounts for 12 percent of Globe’s pre-tax income versus just 7 percent in 2023.
What’s next?
During the briefing, Cu also mentioned plans to reduce the ownership of Mynt’s private equity investors ahead of the IPO.
“We are working to remove any kind of private equity overhang that may exist today when we go public,” Cu said.
The company’s had previously tapped private equity investors to bankroll its expansion during the pandemic. These include Warburg Pincus, Insight Partners, and Bow Wave Capital.
Based on GCash’s recent valuation of $5 billion, some of these funds have more than doubled their investment from a few years ago.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
