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MUFG Buys Stake in Philippine Fintech GCash for $393 Million

A QR code for GCash mobile payment is displayed at a store in Quezon City, the Philippines, on Dec. 2, 2022. The Philippines is expected to announce its consumer price index on December 6. Photograph: Veejay Villafranca/Bloomberg Photographer: Veejay Villafranca/Bloomberg (Veejay Villafranca/Bloomberg)

(Bloomberg) -- Japan’s Mitsubishi UFJ Financial Group Inc. will acquire an 8% stake in Globe Telecom Inc.’s GCash for $393 million, in a deal that would value the top Philippine fintech company at $5 billion. Globe shares surged to the highest in more than a year on Friday.

MUFG will acquire the stake in Globe Fintech Innovations Inc., or Mynt, the firm that manages GCash. Conglomerate Ayala Corp., parent of Globe, will also increase its investment in Mynt by buying an additional 8% interest for the same amount, boosting its stake to about 13%.

Japan’s largest lender has been exploring opportunities to invest in digital startups in Asia’s emerging markets, where it sees a vast pool of potential customers untapped by traditional banks. MUFG said in a statement that it “aims to further capture the Asia-Pacific region’s growth” with the latest acquisition. 

The deal comes at a time when the Philippines is boosting digital payments which grew to more than half of its retail transactions last year. The popularity of GCash — which has around 94 million users in a nation with a population of over 112 million — soared during the pandemic as consumers opted for cashless transactions.

InsiderPH and Nikkei reported the transaction before the official announcement.

MUFG’s deals in recent years include a $200 million investment in Akulaku, a Southeast Asian banking and digital finance firm, in 2022. In June, MUFG said it invested in Ascend Money, a smartphone payment company in Thailand.

Globe, which earlier flagged plans for Mynt to go public, said the MUFG transaction more than doubled Mynt’s $2 billion valuation from its last funding round in 2021. In 2023, Mynt posted a net income of 6.7 billion pesos ($115 million). 

Mynt declined to provide the exact shareholder breakdown after the latest round, but said that Globe and China’s Ant Group remain two of the major shareholders. 

GCash is a critical part of Globe’s drive to become a tech-centric enterprise as it diversifies from its maturing telco business. Shares of Globe climbed 2.6% to end at 2,218 pesos on Friday, the highest since January 2023, bucking a 1.3% drop in the Philippines’ main stock index.

While Globe’s service revenue growth was steady at 3% in the first quarter, its share in Mynt’s earnings more than doubled and accounted for 11% of its income before tax.

--With assistance from Sarah Hilton and Taiga Uranaka.

(Updates with Globe Telecom share price and Mynt’s comment on shareholder breakdown.)

©2024 Bloomberg L.P.