Globe’s GCash took $393M from MUFG at $5B valuation

InsiderPH reported on Friday [link] that Japan’s Mitsubishi UFJ Financial Group (MUFG) had signed a deal to invest $393 million (?22.7 billion) in GCash’s parent company, Mynt. The investment represents an 8% stake in the company that owns and operates GCash. Ayala Corporation [AC 590.00 ?0.3%; 89% avgVol] also increased its stake by acquiring a similar 8% interest to bring its total holding of Mynt to 13%. The price paid by MUFG and AC values GCash at approximately $5 billion, which is a 150% increase from the $2 billion valuation that GCash had in 2021. InsiderPH reported that the shares were a mix of primary and secondary shares, “with some private equity investors selling down their stakes to make way for a new shareholder.” MUFG is Japan’s largest lender, and according to Bloomberg [link], has been “exploring opportunities to invest in digital startups in Asia’s emerging markets, where it sees a vast pool of potential customers untapped by traditional banks.” An exact accounting of Mynt’s shareholders is not available, but Globe [GLO 2218.00 ?2.6%; 399% avgVol] and Ant Group are apparently still considered major shareholders. 

MB BOTTOM-LINE: That valuation is amazing, but it’s probably not a surprise to businesses and consumers given how broadly and deeply GCash has integrated itself into Philippine life. While GCash has done well to evolve as an e-wallet provider, MUFG’s investment could signal a heightened focus on lending as a revenue driver. But that’s all just red meat for a potential prospectus to support an IPO. This transaction is doing a lot of heavy lifting for a potential Mynt listing. First, it obviously pegs GCash’s value at a new “floor” which is 150% higher than its previous valuation; any IPO would use this transaction as a stepping stone to an even higher offer price and valuation. Second, it brings in a massive regional strategic investor onboard which is a great signal to other institutional investors. Investing is a real “monkey-see-monkey-do” game, and smaller banks and funds look at an investment by a top-tier bank like MUFG as a seal of approval. They know the potential risks are now spread across a larger number of deep-pocketed and sophisticated players, making their potential entry in a subsequent round (or at the IPO) all the easier to justify. Last, the transaction puts Mynt and GCash back into the global financial news cycle and acts as a sort of “remember me?”, which can be incredibly useful when the eventual underwriters start to make the rounds checking on interest for a potential IPO. Instead of having to defend a higher valuation implied by investments that were last made three years ago with all that has happened in the interim, the underwriters can just point to this fresh $5 billion valuation–with the paint still wet–and talk about the even larger valuations that will come from what the company can do in the future. Did enough of those early shareholders get an exit in this deal to release some of that tension to list, or are there additional financial investors that were unable to be satisfied in this round that will continue to push for that IPO exit?

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