By means of Ashley Erika O. Jose, News reporter
THE FRESH investments by Ayala Corp. (AC) and Japan’s Mitsubishi UFJ Financial Group (MUFG) in Globe Fintech Innovations, Inc. (Mynt) could help improve GCash’s operational capabilities and drive investor interest in its planned initial public offering (IPO), analysts told analysts.
“Ayala Corp.’s investments and Japan’s MUFG are expected to propel GCash to new heights by accelerating growth and innovation, improving service capabilities and solidifying its position as a leading fintech (financial technology) player in the Philippines’ digital economy. ” said Managing Director Astro C. del Castillo of First Grade Finance, Inc. in a Viber message on Sunday.
G-Xchange, Inc. is the operator of GCash. GCash’s parent company, Mynt, is a subsidiary of Ayala-led telecommunications company Globe Telecom, Inc.
In a stock release on Friday, Ayala Corp., through its unit AC Venture Holdings Corp., announced that it is increasing its stake in Mynt by acquiring another 8%, raising its total stake to 13%, for P286.4 billion .
It also noted that Ayala Corp.’s board of directors. approved the transaction on July 30.
“AC’s strategic priority is to rationalize its portfolio and reallocate capital to clear corporate winners. The increased stake in Mynt allows AC to further benefit from GCash’s success and strong long-term growth potential,” said Ayala Corp.
In addition, Mynt said it has also secured funding from Japan’s MUFG, more than doubling its valuation in the 2021 funding round from $2 billion to $5 billion.
“This strategic move underlines the confidence in GCash’s business model and highlights the increasing importance of fintech solutions in promoting financial inclusion in the region,” said Mr Del Castillo.
Mynt said MUFG, through its unit MUFG Bank, Ltd., has also entered into a binding agreement to invest in Mynt, acquiring an 8% stake in the company.
“We are pleased to welcome MUFG as a new strategic partner. With their global expertise and reach in financial inclusion, they will play an important role in further expanding GCash’s social impact, especially among the underserved,” said Martha Sazon, President and Chief Executive Officer of Mynt.
The new investments indicate confidence in GCash’s growth trajectory, said Juan Paolo E. Colet, managing director of Chinabank Capital Corp.
In January, the electronic wallet platform said it is working to be ready for its IPO target.
“MUFG’s entry has a halo effect on Mynt that could boost its future IPO. The IPO is expected to be priced higher than the last valuation of $5 billion,” Mr Colet said.
He said these investments could increase investor interest, potentially positioning GCash’s planned IPO as the largest in the Philippines.
‘Assuming they decide to list on the local market. However, the higher valuation also reinforces the view that it could make more sense for Mynt to list on a major foreign stock market where there is better liquidity and valuation for fast-growing fintech companies,” Colet said.
Mr Del Castillo said the move is a strategic investment that could increase market appetite and boost confidence in GCash’s plans to go public.
“The strategic investments in GCash by both companies are likely to significantly enhance investor confidence in the company’s potential for a successful IPO by strengthening its credibility, financial strength, growth prospects and overall market perception,” he said.
On the local bourse, shares in Globe rose P56, or 2.59%, on Friday to close at P2,218 each.