Is this enough to turn the tide? Dennis Anthony Uy to spend P1.5B to buy back nosediving Converge shares

Ultra bilyonaryo Dennis Antony Uy is buying back shares in his fiber broadband firm which has lost 67 percent of its value since peaking at P45.40 in October 2021.

The Converge Information and Communications Technology Solutions (CNVRG) board approved on September 22 a P1.5 billion buyback program for its shares.

CNVRG disclosed the buyback an hour after its stock closed at a new 52-week low of P14.92, the worst performing stock of the day. CNVRG is currently 11 percent down from its initial public offer price of P16.80.

CNVRG said the buyback was meant to “increase shareholder value and to demonstrate confidence in the company’s fundamental value, business, and prospects.”

The firm’s stock has been under selling pressure since the lockup period on 1.19 billion shares (15.83 percent) held by its second biggest investor, Coherent Cloud of US private equity firm Warburg Pincus, expired in October 2021.

Last May, CNVRG bought back P6.5 billion worth of shares at P25 each (equivalent to 3.5 percent of the company) owned by Coherent Cloud.
Coherent Cloud’s stake in CNVRG has dropped to 3.07 percent as of June 2022 from 15.83 percent in December 2020.

Its public float has increased by half to 30.91 percent from 20.43 percent during the same period.