PSE enters new territory with GCash’s IPO. But to thrive, it must go further.

Sam Calleja/Rappler

GCash’s incoming record-setting IPO hints at a stock market opening itself to asset-light enterprises, but is still far from embracing high-growth tech

AT A GLANCE

• GCash is set to have a record-breaking IPO on the Philippine Stock Exchange, potentially exceeding P55.89 billion, and will debut as one of the top ten most valuable companies in the market.
• The company, which operates as a digital application with minimal physical assets, has a strong lead in the e-wallet market with 41.5 million monthly active users, but faces challenges from competitors and a stagnant stock market.
• Despite the excitement surrounding GCash's entry, the PSE's strict IPO requirements may hinder the growth of other tech startups, although there is interest from multiple tech firms in going public.

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MANILA, Philippines – GCash’s debut on the Philippine Stock Exchange (PSE) is predicted to be the biggest opening in the market’s history. In terms of IPO, it is set to match or even exceed the P55.89-billion record set by Monde Nissin in 2021 with an expected opening between P53 to P60.9 billion. And, with a post-IPO valuation of P442 billion, GCash will debut in the top ten most valuable companies on the PSE in terms of market cap, alongside the likes of Ayala Corporation and SM Prime Holdings. 

The company is entering a stock market largely ruled by traditional businesses in sectors such as banking, utilities, retail, and real estate, among others. On one hand, these are companies that carry vast amounts of physical assets, whether goods, property, or facilities, which drive their valuations. On the other hand, GCash, being a digital application, stands out as an asset-light enterprise.

GCash’s valuation did not come from having a large base of physical assets. As of June 30, Mynt had P237.8 billion in total assets, but just P906.9 million in property and equipment, equivalent to less than 0.4% of the total. Much of the rest consisted of cash, funds held in trust, receivables, and loans. This is in line with the company’s own description of its payments business being able to scale transaction volumes and users without a proportionate increase in physical infrastructure.

Rather, the P442 billion figure would have to be derived from their control in the e-wallet market. According to the company’s IPO summary, GCash has recorded 41.5 million monthly active users during the second quarter of this year, and has four times the active users of its closest competitor. Their lead in Philippine fintech is what is driving their top ten valuation. 

Shock to the system

The excitement for GCash’s debut comes at a turbulent time for the PSE. With only around 280 listed companies, the PSE suffers from being smaller compared to other Southeast Asian markets such as that of Singapore, Vietnam, and Thailand, among others. In recent years, the stock exchange has only shrunk, with more than P580 billion lost due to company exits.

The PSE lacks a high-growth, digital presence. Currently, the stock exchange is dominated by asset-heavy companies. The biggest companies are banks, property developers, utilities, telecom firms, and consumer-serving conglomerates. These are companies that require a lot of investment in property, land, equipment, and other physical assets order to scale, and thus will not see the type of growth that would attract investors the same way that ventures like startups could. Meanwhile, exchanges such as the NASDAQ are led by major tech conglomerates that have been able to scale exponentially, even prior to the boom caused by generative AI. 

GCash, which looks nothing like your typical local blue chip, might be just what the PSE needs to shake itself from its stupor. At its P6.60 offer price, Mynt’s roughly P442-billion valuation puts it at about 24.6x its latest trailing 12-month earnings through H1 2026. That is far above the 9.87x price-to-earnings (P/E) multiple of the Philippine Stock Exchange index (PSEi) as of October 2. The PSE’s Financials index was even lower at 6.05x P/E. One of the few blue chips trading at a similar premium is port giant ICTSI – the country’s most valuable listed company controlled by the country’s wealthiest man – at 25.53x P/E.

In short, GCash has plenty to live up to if it is to justify that hefty premium. GCash’s entry hopes to shake up the stagnant exchange. However, even in this record-breaking debut, there are still indications of a market set in its ways. 

Old problems with new players

GCash is far from an outsider in the Philippine business world. The fintech company was founded by telecommunications giant Globe, and has continuously received backing from other established conglomerates in the country, such as Ayala Corporation.

While GCash is expected to bring significant growth and activity to the PSE, it is a company entering its maturity phase. Over the course of this year, GCash has recorded slowing growth. The company has already captured the lion’s share of the fintech market, a foothold that will come under pressure from competitors such as Maya. The company hopes that the influx of capital entering through the stock market can help fund their next big push in terms of expanding its ecosystem. (READ: For GCash’s early private equity backers, record IPO will be ultimate payday)

Meanwhile, the PSE’s requirements for IPO listings remain stricter than other exchanges. Currently, a company wishing to enter the PSE must report a net income of either P75 million cumulatively from the past three years or P50 million during the most recent fiscal year. These requirements discourage companies that prioritize growth before profits, such as tech startups.

Elsewhere, exchanges such as the Singapore Exchange and the NASDAQ offer ventures on different paths in order to be eligible. While being too lenient in terms of profit requirements runs the risk of allowing unsustainable companies with no route toward profitability to enter, being as strict as the PSE limits access to only the most successful and matured ventures.

GCash is not the only major tech company eyeing an IPO. Earlier this year, the PSE and Department of Information and Communications Technology reported that as many as 15 tech firms were expressing interest in going public, with the PSE exploring a tech board to open the doors for these firms. Meanwhile, GCash’s largest competitor, Maya, is also planning to go public in 2027. 

The question now is if the stock exchange will be able to propel itself with the GCash IPO to lower its gates for more high-growth ventures. –  Paolo Vellila/Rappler.com