By Revin Mikhael D. Ochave, Reporter
THE RECENT deal between Ayala Corp. and Japan’s Mitsubishi Corp. is likely to increase the valuation of the anticipated initial public offering (IPO) of the electronic wallet GCash, according to analysts.
On Friday last week, Ayala Corp. announced that it was selling its 50% stake in AC Ventures Holding Corp. (ACV) to Mitsubishi for a minimum of P18.4 billion.
ACV owns 13% of Globe Fintech Innovations, Inc. (Mynt), which has two fintech companies, G-Xchange Inc., the operator of GCash, and Fuse Lending, a tech-based microlender.
“The deal reinforces the value of Mynt for its future IPO. With key investors coming in at a valuation of around $5 billion, Mynt is poised for an IPO at a much higher valuation,” Chinabank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.
GCash previously said it was planning an IPO but would wait for a more favorable market.
According to Mr. Colet, the IPO could happen as early as next year depending on market conditions.
“I can see the IPO within the next two to three years. Perhaps as soon as next year if market conditions are very good,” he said.
“So far, it seems Globe wants a local IPO for Mynt. But it would be better if they do a dual listing in the Philippines and a larger stock market to get the best of both worlds,” he added.
Globalinks Securities and Stocks, Inc. Trader Mark V. Santarina said in a Viber message that the deal helps GCash’s international expansion plans.
GCash services are available in 16 countries, including the United States, United Kingdom, United Arab Emirates, Italy, Australia, Canada, Germany, and other Asian countries.
“For GCash, Mitsubishi’s entry paves the way for potential international expansion, particularly into Japan, and may boost its service offerings in microlending and financial technology,” he said.
“While GCash is considering overseas listings for its IPO, there is still hope it may choose to list on the Philippine Stock Exchange (PSE) instead, which would be a significant win for the local market,” he added.
AP Securities, Inc. Research Head Alfred Benjamin R. Garcia said in a Viber message that the deal could help improve other Ayala ventures.
“With its entry into ACV, Mitsubishi is not only buying into GCash but also into other ventures under ACV like Gogoro and Zalora. We believe Mitsubishi’s expertise can help improve these businesses and maybe even accelerate the expansion of GCash into Japan,” he said.
Mr. Garcia added that the deal allows Ayala Corp. to trim its debt.
“As we understand, Ayala Corp., through ACV, took on some debt when it purchased an additional 8% stake in Mynt at the same time as the deal with Mitsubishi UFJ Financial Group (MUFG) in August. Mitsubishi’s purchase of a 50% stake in AC Ventures will allow ACV to pay down this debt,” he said.
In August, Ayala Corp., through ACV, announced it is increasing its ownership in Mynt by acquiring an additional 8%, raising its overall share to 13%, for PHP 286.4 billion.
MUFG, through unit MUFG Bank, Ltd., has also entered into a binding agreement to invest in Mynt, acquiring an 8% stake in the company.
“It appears Ayala wanted a partner not just for Mynt but also for its other businesses under ACV. The biggest potential of this partnership is the expansion of AC Ventures’ investment universe in that Mitsubishi can open doors and introduce opportunities for growth outside the Philippines,” Mr. Colet said.
“Mitsubishi can also contribute expertise and resources to enhancing the value of those businesses that are already part of the ACV platform,” he added.
Meanwhile, Mr. Santarina said the deal will provide a “strong financial boost” to the conglomerate.
“This capital will enhance Ayala’s liquidity, allowing it to reduce debt or pursue new investments. Mitsubishi’s involvement may also increase the value of Ayala’s remaining stake in Mynt,” he said.
Ayala Corp. was last traded on Oct. 18 at P719 apiece.
