GCash lowers IPO price to reflect market conditions
Filipino mobile payment firm GCash has set its IPO share price over 30% lower than initially planned. The adjustment reflects a weaker peso and reduced stock market liquidity.
Mynt, the operator of mobile payment service GCash, has set its initial public offering (IPO) share price at 6.60 Philippine pesos (approximately $0.11). This represents a discount of over 30% from the maximum price indicated in its preliminary prospectus.
The pricing adjustment comes amid challenging market conditions, including a record low for the Philippine peso against the US dollar and declining trading volumes on the Philippine Stock Exchange (PSE). The company aims to raise at least 53 billion pesos ($847 million) through the offering, with an expected post-IPO valuation of at least $7 billion.
"For GCash, this is a more realistic price, a way to have more Filipino retail investors to take part in their growth story," commented Paolo Manansala, equity analyst at COL Financial.
Major investors have also influenced the pricing. BlackRock, a cornerstone investor in Mynt, has stated it will only participate in the IPO at a price not exceeding 6.60 pesos. However, analysts are divided on whether this valuation is justified. At this price, the company's valuation is comparable to a mid-sized bank, but its business model is considered less robust, as it cannot offer lending products without external financing or partnerships that erode margins.
GCash operates under an e-money license, requiring it to hold approximately 50% of deposits in its wallets as liquid reserves. This contrasts with banks, which face significantly lower reserve requirements. The company's lending business is expected to require substantial capital, which the IPO proceeds are intended to support.