Philippine Startups Go Public: Lessons from the IPO Journey

The Philippines' startup ecosystem has witnessed a significant transformation, with several companies making the ambitious leap from private ventures to publicly traded entities. While the country's IPO market has faced challenges compared to regional peers, the companies that have successfully navigated this journey offer valuable insights for aspiring entrepreneurs.

The Philippine IPO Landscape: Current State and Challenges

The Philippines has struggled to match its Southeast Asian neighbors in IPO activity. The country only saw three IPOs in 2024, far below Malaysia's 46 IPOs in the region. Between 2000 and 2023, capital raised through IPOs represented only 0.2% of GDP, much lower than peer countries except Indonesia. The Philippine Stock Exchange (PSE) has targeted six IPOs for 2025, though analysts remain skeptical about achieving this goal amid global market uncertainties.

Current regulatory challenges include lengthy approval processes and high listing fees. The OECD has urged Philippine regulators to ease listing requirements and reduce fees to encourage more companies to go public. The requirement for companies to maintain a 20% public float has been particularly challenging for large companies, though the Securities and Exchange Commission (SEC) recently introduced exemptions allowing companies to start with a 15% float, provided they increase it to 20% within three years.

Success Stories: Learning from the Pioneers

Converge ICT Solutions: Pandemic-Era Success

Converge ICT's IPO in October 2020 stands as one of the Philippines' most successful tech-related public offerings. The fiber broadband provider raised ₱29.08 billion, making it the largest IPO in the Philippines at the time.

Key Success Factors:

• Perfect timing: Launched during the pandemic when demand for broadband services surged due to work-from-home arrangements
• Clear value proposition: Positioned as the fastest-growing fixed broadband operator with 56.6% market share of new residential subscriptions since 2018
• Strong backing: Supported by global private equity firm Warburg Pincus, which provided credibility and expertise
• Focused use of proceeds: 90% of IPO proceeds earmarked for capital expenditures to accelerate nationwide fiber network rollout

Monde Nissin Corporation: Record-Breaking Food Giant

Monde Nissin made history in June 2021 with the Philippines' largest-ever IPO, raising ₱48.6 billion ($1 billion). The company, known for Lucky Me! instant noodles and owner of UK-based meat substitute brand Quorn, demonstrated how traditional businesses could leverage growth opportunities in emerging sectors.

Strategic Insights:

• Diversification strategy: While dominating the Philippine snack market, the company bet its future on the alternative meat sector through Quorn
• International cornerstone investors: Secured 11 renowned institutional investors including Singapore's GIC, Capital Group, and Eastspring Investments
• Clear growth narrative: Alternative meat business represented 22% of total sales with significant expansion potential
• Timing the market: Capitalized on growing global interest in alternative proteins and sustainability

Xurpas: A Cautionary Tale

Xurpas, once hailed as the Philippines' tech IPO poster child, serves as a stark reminder of execution risks. After a hot debut in December 2014 at ₱3.97 per share and reaching a peak of ₱19.24 in April 2016, the stock collapsed to around ₱5.57 by 2017.

Critical Failure Points:

• Over-diversification: Multiple acquisitions across different verticals that failed to deliver synergies
• Poor execution: Several subsidiaries and acquisitions had to be shut down due to heavy losses
• Regulatory dependence: Core revenue streams were vulnerable to regulatory changes
• Impairment losses: Booked ₱1.811 billion in impairment losses related to various investments

Current IPO Preparations: GCash and Maynilad

GCash: The Fintech Giant's Calculated Approach

GCash, the Philippines' leading digital wallet, represents the most anticipated IPO in the country's history. With a targeted valuation of $8 billion and potential to raise up to $1.5 billion, it would surpass Monde Nissin as the largest Philippine IPO.

Preparation Strategy:

• Regulatory engagement: Working with regulators to secure favorable listing conditions, including exemptions from the 20% public float requirement
• Market timing: Waiting for optimal market conditions and acceptable valuations before proceeding
• Strong institutional backing: Parent company Globe owns 36% stake, with support from Ant Group and Ayala Corp
• International interest: Engaged investment banks including JPMorgan Chase, Morgan Stanley, and UBS

Key Challenges:

• Market volatility: Global economic uncertainties and tariff concerns affecting timing decisions
• Regulatory dependencies: Significant revenue from digital gambling platforms faces potential restrictions
• Valuation expectations: Balancing shareholder expectations with market realities

Maynilad Water Services: Infrastructure Play

Maynilad, the water concessionaire for Metro Manila's west zone, is progressing with its ₱45.8 billion IPO following SEC approval. The company is required to offer at least 30% of its outstanding capital stock as part of its government-issued franchise.

Strategic Advantages:

• Regulatory requirement: IPO mandated by franchise agreement, providing clear timeline and necessity
• Essential service: Water services represent stable, regulated revenue streams
• Cornerstone investors: Secured foreign institutional investors to anchor the offering
• Clear use of proceeds: Funds designated for capital expenditures in water, wastewater, and customer service systems

Key Lessons for Philippine Startup Founders

Pre-IPO Preparation

Corporate Housekeeping: One of the most significant hurdles Philippine companies face is corporate reorganization and compliance. Companies must invest 18-24 months in preparing financial systems, governance structures, and regulatory compliance frameworks.

Market Timing: Successful IPOs demonstrate the critical importance of timing. Converge benefited from pandemic-driven demand, while Monde Nissin capitalized on alternative protein trends. GCash's delays show how market conditions can force even well-prepared companies to wait.

Clear Value Proposition: Investors need to understand the growth story and competitive advantages. Converge's focus on fiber infrastructure and Monde Nissin's alternative protein strategy provided clear narratives for institutional investors.

Execution and Management

Focus Over Diversification: Xurpas's failure highlights the risks of pursuing too many opportunities simultaneously without adequate execution capabilities. Successful companies maintain clear strategic focus while building operational excellence.

Regulatory Relationship Management: Given the Philippine regulatory environment, companies must proactively engage with the SEC and PSE early in the process. Maynilad's regulatory requirement actually provided clarity and timeline certainty.

International Standards: Attracting foreign institutional investors requires adherence to international governance and reporting standards. Companies like Monde Nissin and GCash have invested heavily in building institutional-grade systems.

Capital and Growth Strategy

Use of Proceeds Clarity: Successful IPOs clearly articulate how capital will be deployed for growth. Converge's focus on network expansion and Maynilad's infrastructure development provided concrete roadmaps for investors.

Cornerstone Investor Strategy: Securing committed institutional investors before public marketing reduces execution risk and provides pricing anchors. Both Monde Nissin and Maynilad have successfully employed this approach.

Alternative Funding Considerations: The challenges with Philippine IPOs have led some companies to consider private equity or regional listings. Philippine companies should evaluate all options, including Singapore listings for tech companies.

Advice for Founders Considering IPOs

Start Early and Be Patient

IPO preparation requires significant time investment. Companies should begin building IPO-ready systems and processes at least two years before targeting a public offering. The complexity of regulatory requirements and market timing means patience is essential.

Build for Scale, Not Just Growth

Investors in public markets demand scalable business models with clear paths to profitability. Focus on unit economics and operational leverage rather than just revenue growth. The failure of several IPO candidates demonstrates that growth without sustainable economics doesn't attract quality institutional investors.

Consider Alternative Paths

Given the challenges in the Philippine IPO market, founders should evaluate multiple exit strategies. This includes regional listings, strategic acquisitions, or private equity partnerships. The goal is creating shareholder value, not necessarily going public in the Philippines.

Invest in Governance and Compliance

Public companies face significant regulatory and reporting requirements. Building robust governance structures, audit capabilities, and investor relations functions is essential for long-term success. Companies that cut corners on these investments often struggle post-IPO.

Maintain Long-term Vision

The IPO is not the end goal but a funding milestone. Companies must balance short-term market pressures with long-term strategic objectives. Successful public companies continue innovating and growing regardless of stock price fluctuations.

Looking Ahead: The Future of Philippine IPOs

The Philippine startup ecosystem's maturation depends partly on creating more successful IPO models. GCash's upcoming listing could serve as a catalyst for other tech companies, while regulatory reforms may improve the overall environment for public offerings.

The success of companies like Converge and Monde Nissin demonstrates that Philippine companies can access global capital markets successfully. However, the failures highlight the importance of execution, market timing, and strategic focus. For founders considering the IPO path, the key is building businesses that can thrive in public markets while serving the unique needs of the Philippine market.

The journey from startup to public company remains challenging but achievable for well-prepared, strategically focused companies with strong execution capabilities. As the ecosystem matures and regulatory conditions improve, more Philippine startups may find the IPO path viable for accessing growth capital and creating long-term shareholder value.