GCash is going public. But it already belongs to the public

GCash is going public. In one important sense, however, it went public years ago; not because Filipinos owned its shares, but because Filipinos began depending on it.

Somewhere between sending money home, paying the electricity bill, buying load, paying the neighborhood store, receiving payment for a day’s work and putting away savings, GCash crossed an invisible line. It stopped being merely an app people used and became part of the infrastructure through which everyday economic life moves.

Now, as Mynt, the company behind GCash, prepares for what could become the country’s largest initial public offering, much of the discussion has focused on who is selling, who is cashing out and what investors should eventually be willing to pay.

These are legitimate questions. But we ask another: What made GCash so valuable in the first place?

One criticism is that the IPO is less about raising money for GCash than allowing early investors to cash out. There is some basis for this. Roughly one-fifth of the shares in the base offering are newly issued primary shares whose proceeds will go to Mynt, while roughly four-fifths are secondary shares being sold by existing shareholders.

Calling it “just an exit,” however, is an oversimplification. Financial investors provide capital, assume risk and eventually need a mechanism to realize some of the value of successful investments. Mynt is also already substantially profitable, so issuing far more new equity merely to make the IPO appear more like a capital raise could unnecessarily dilute existing shareholders.

So, yes, some investors are taking money off the table. That’s not inherently wrong.

But perhaps we are debating the wrong exit.

Investors provided financial capital. Globe helped provide the ecosystem from which GCash emerged. Management and employees built the business, while banks, merchants and other partners expanded its reach. But another group contributed something equally indispensable: the Filipino public.

GCash reportedly has around 40 million monthly active users. Those millions did more than download an app. They created a network. People used GCash because merchants accepted it; merchants accepted it because customers used it. Each additional participant made the network more useful to everyone else.

Underneath those transactions was something more fundamental: trust. Every time someone puts money into GCash, that person expresses confidence that the money will still be there, that it can be transferred, that the system will work and that when something goes wrong, someone will make it right.

Repeated millions of times, those individual acts of confidence become an enormous economic asset.

Capital helped build GCash. Trust helped make it valuable.

I have argued in this column that reputation should be understood as capital: a stock of trust, credibility, legitimacy and goodwill accumulated over time. GCash provides an unusually tangible example. Every successful transaction, every merchant that accepts GCash and every customer who says, “GCash mo na lang,” adds incrementally to that stock.

That value does not appear neatly on a balance sheet. Yet remove trust from GCash and much of the economic value investors are being invited to buy would quickly come under pressure. The IPO therefore represents the monetization of reputation capital accumulated over years.

This becomes more important because GCash is entering a different stage of development. Its first great chapter was largely about adoption. With tens of millions of Filipinos already using the platform, the next will increasingly be about monetization.

Future growth will come not simply from adding users but from deepening relationships through lending, savings, investments, insurance and other financial services. There is nothing inherently problematic about that. Businesses must grow, and public shareholders will expect increasing revenues and returns.

But GCash must ask not only how much more value it can generate from each user, but how much more value it can create for each user.

Those two propositions must remain connected.

Reputation capital can be monetized, but it can also be overdrawn. Fraud, cybersecurity failures, outages, poor customer resolution, irresponsible lending practices, questionable fees and privacy concerns can all make withdrawals from the same reservoir of trust. Extract too much value without creating enough in return, and a company risks consuming the asset that made the extraction possible.

This is particularly important because GCash increasingly resembles infrastructure. It remains a private company, and Filipinos have alternatives. But scale changes relationships. When tens of millions depend on a platform to move money, an outage is no longer merely a customer-service problem. Fraud and cybersecurity cease to be purely operational concerns. They become questions of institutional trust.

A company does not have to be publicly owned to acquire public responsibilities. Sometimes scale creates them. Sometimes dependence does. The IPO will make GCash publicly traded, but its ubiquity has already made it publicly consequential.

Which brings us back to the exit.

The market will eventually determine what investors are prepared to pay for GCash. Early shareholders may realize extraordinary returns, while new shareholders may also prosper if the company continues creating value. Those are questions for investors.

The more consequential exit for GCash may be something else: Filipinos losing trust in the platform.

Investors can exit their positions. Customers can exit their trust. The first appears clearly in an IPO prospectus. The second becomes visible only when behavior starts changing.

Early investors may now take some of their capital out. That is how markets work.

But there is one form of capital GCash cannot afford to lose: the capital the public puts in its trust.

The final offer price of P6.60 tells us what investors are prepared to pay for GCash. It will not tell us what made GCash valuable.

The market determined the price of GCash. The public will continue deciding its value.

*Dr. Ron F. Jabal, APR, is the CEO of PAGEONE Group (www.pageonegroup.ph) (www.pageonegroup.ph) and the Founder and President of the Reputation Management Association of the Philippines (www.rmap.org.ph). Please correspond to [email protected] or [email protected].