We don’t talk enough about how the Philippines is slowly emerging as a strong contender for private equity (PE) investors in the Southeast Asia region. They saw venture capital investments and PE reach almost USD1.3 billion in 2014.
This marks a 491 per cent jump from USD220 million in 2014, and that number is demanding attention from investors, but the quality and potential of upcoming IPOs, specifically from tech players such as GCash, could further improve investor sentiment.
The question remains: will the GCash IPO be a turning point for tech exits in the Philippines?
We see this time and time again as IPOs in the country are being watched as closely as GCash. As the leading e-wallet platform in the Philippines, GCash is reportedly gearing up to a listing that could raise to almost USD1.5 billion. If this is achievable, this will mark the Philippines’ biggest IPO funding ever.
We are exploring the Philippines’ journey as a regional player
On top of that, what makes GCash stand out the most is its potential to shift expectations around scalability, liquidity, as well as public exit opportunities for Philippine startups. In a region where exits have somewhat been dominated by countries like Singapore and Indonesia, this could also mean the right path forward for Manila-based startups and PE investors. Though the Filipino health tech ecosystem is positioned for future growth, it is a trend that could ripple across other sectors with the right success stories.
Why exactly do IPO volumes still fall short of expectations?
Although we see all these headlines about GCash listing, it is important to note that the overall IPO activity in the Philippines remains somewhat dull.
To put this into perspective, only three companies went public in 2014, raising just PHP11.86 billion, which is about USD200 million, which is way far below the Philippine Stock Exchange (PSE)’s target of PHP40 billion.
This is affected by the high interest rates, global uncertainty, as well as the ongoing market volatility, which all of them remain some of the biggest factors that weigh in on public market sentiment.
While we also see local investors remain cautious on this issue, with international funds being more and more selective with their exposure to emerging market equities. Hence, this disconnect between private dealmaking momentum and public capital market performance is something that analysts pay attention to in the next few years.
How can macro fundamentals sustain investor confidence?
In a lot of ways, the Philippines actually has the potential to sustain investor confidence by focusing on its macroeconomic story. This country specifically has boasted strong GDP growth, a mobile-first population, as well as increasing digital adoption. These kinds of fundamentals are what make the region attractive to the majority of growth-stage investors, especially those looking for the “next big thing” in ASEAN countries.
The government, on the other hand, has put in effort to improve the region’s corporate governance, modernise listing processes, and even deepen its domestic investor base. The PSE has also been actively courting tech startups and PE-backed firms to offer more flexible rules and streamline disclosure requirements. So, will these efforts move the needle?
Yes, of course, improved regulations may not be quite enough to push further, but they are building this from the ground up. The Organisation for Economic Co-operation and Development (OECD)’s 2024 Capital Market Review of the Philippines stated that while the region’s legal and governance framework is improving, investor confidence still clings to consistent enforcement, as well as overall transparency.
We should also talk about how private equity is also calling for “deeper” secondary markets in the region, and better post-listing support for newly public companies. Why is that? Without any of these components, even successful IPOs will fail, which could risk future listings from similarly ambitious startups.
Is the Philippines moving towards a more predictable exit landscape?
Well, no, a few IPOs won’t magically transform the market overnight — but what they could do is they could change the narrative.
Take GCash’s listing as the main example, and only if it is executed well enough, it may be the proof that the Philippines can actually deliver viable public exits at scale. This would change the narrative and tell the investors that “more exits attract more capital”, which in turn strengthens the startup pipeline.
On the other hand, PE funds are already paying attention to this. Another big fintech player is Global investment firm KKR’s rumoured move to sell a stake in Maya, which shows that investors are actively seeking what comes next.
The Philippines just needs “a few more successful exits”, and they could evolve from a high-risk outlier into a somewhat predictable destination for Southeast Asia-focused growth capital.
Compared to other countries in the region, the Philippines still lacks IPO volumes and depth. For example, Malaysia and Thailand remain benefiting from institutional capital participation and more “mature” investor bases. While in Indonesia, they have witnessed a bumper crop of listings in the past two years.
Sure, one could say that the gap is slowly closing. However, the Philippines’ strong private funding activity, coupled with its large consumer market and digital adoption curve, provides them with a compelling narrative. They could use it to attract PE investors and late-stage venture capitalists.
The Philippines as Southeast Asia’s next PE hotspot
Potentially, we could see the Philippines as the next PE hotspot in the region if they play right. They have the criteria to do big things — a very large, underpenetrated consumer market with a maturing startup ecosystem, as well as young investors to tap into Southeast Asia’s economies.
In order to convert this into long-term credibility, they will need more than just one standout IPO. They have to build their roots from the ground slowly and give them a reputation for consistency, especially when global investors are looking for listings, governance rules, and outcomes.
But until then, the Philippines remains one of the region’s most promising, yet still emerging private equity frontiers.