Will GCash go public by year-end?

Written by Kapronasia || July 12 2023

GCash is by several measures the most successful e-wallet in the Philippines. There is no question it has a massive user base – 81 million active users and 2.5 million merchants and social sellers as of May. What’s more, according to the company’s leadership, it became EBITDA profitable three years ahead of schedule, though it has declined to be more specific than that. While the global economic environment is not optimal for an IPO, GCash itself is doing well enough that it can probably afford to go ahead with the listing before year-end.

For fintechs like GCash, one of the biggest challenges in going public is finding that sweet spot when investor enthusiasm dovetails with actual performance. Tech startups, especially in large emerging economies, tend to generate lots of hype that sends their valuations in private markets soaring. But public markets are usually better judges of a company’s true value. The truth can hurt, resulting in an underwhelming IPO – as companies like Paytm have discovered.

That said, GCash’s timing seems right. The Philippines is in the midst of a major push towards digitization of financial services, led by its central bank. This policy well pre-dates the pandemic, but was turbo-charged by it.

A new Visa survey published In June suggests that the Philippines’ cashless movement is gradually gaining momentum. The study found that 50% of consumers carried less cash in 2022 as they switched to cards, mobile wallets and QR code payments. as more of them use cashless payments such as cards, mobile wallets and QR code payment. According to the Visa study, 64% purchases in the Philippines were made through cash payment last year, compared to 78% in 2021.

Meanwhile, although it decided against applying for a digital banking license, GCash still has a lot going for it. Besides its large user base and solid financials, the e-wallet has backing from private-equity heavyweights, Ant Group and the Philippine telecoms giant Globe via its fintech subsidiary Mynt. Globe posted solid earnings in 2022. Including one-time net gains from the partial sale of its data center business and the sale and leaseback of its tower assets, its net income reached P34.6 billion (US$626.6 million), up 46% from P23.7 billion (US$429.2 million) in 2021. Excluding the one-time gains, Globe’s normalized net income would have been P20 billion (US$362.2 million), up 13% over 2022.

One reason it is in GCash’s interest to go public sooner rather than later is that it has reached an inflection point with its massive user base and improving financials. Being able to raise cash cheaply on the Manila Stock Exchange (the likely choice for listing) could give GCash an edge over the many private fintechs with which it vies for market share in the Philippines.

Additionally, GCash has existed since 2004 and has been a unicorn since 2021. At almost 20 years of age, the company should be getting ready to provide investors with an exit.