The much-vaunted initial public offering (IPO) of GCASH, the leading mobile wallet service, may be pushed back despite the improved market sentiment following the successful and peaceful mid-term election.

Yes, Virginia, market sentiment has shifted from the subdued conditions at the start of the year to cautious optimism, with the election results generally accepted as credible. This improved outlook was reflected in Wednesday's trading on the local bourse, which closed up by 0.63 percent or 40.02 points at 6,375.35, a slight increase from Tuesday’s 6,315.04.

First Metro Securities Brokerage Vice President and Head of Business Development & Market Education Department Andro Leo “Andoy” Beltran concurred with my observation that the “overall feel of the market now has improved compared to the sentiment early this year,” attributing it to the peaceful conduct of the mid-term election. "The result of the elections was credible.”

Nonetheless, the market remains cautious as the 90-day reprieve from the Trump tariff war approaches, a situation described as a Sword of Damocles that could influence bourse trading.

Although the initial assessment after May 12 suggests that the second half of the year may offer better conditions for IPOs to proceed as planned, especially with expectations of continued interest rate declines, this would make equities more attractive.

The central question, however, is how the imposition of the Trump tariff in the coming months will unfold and how local authorities will navigate its impact on the domestic economy. This condition, coupled with the apparent disagreement on the valuation of the country's first local e-wallet app, is among the reasons for the possible deferment of the GCash IPO, scheduled for the fourth quarter.

IPO valuation is a method used to determine a company's appropriate worth before it goes public. GCash, launched in October 2004 as an SMS-based money transfer service, is the most popular mobile wallet, boasting over 76 million users as of 2023, accounting for nearly 67 percent of the Philippine population.

Investors eagerly await the GCash listing, which is not a typical IPO. There is no benchmark for this offering, as it is the first fintech company to go public to date. For those not well-versed in technology, like myself, fintech is a specialized area of financial technology that employs cutting-edge innovations in applications, services, and processes to expand, enhance, automate, and scale the delivery of financial products and services.

And despite the Philippine Stock Exchange index’s (PSEi) slight rise, valuation remains the primary concern. It's been noted in market discussions that several companies, including GCash, are reportedly waiting for further improvements in market conditions to achieve higher valuations before proceeding with their IPOs.

The latest information from market sources familiar with the IPO indicates a current valuation of ₱15 per share, which is apparently unacceptable to the management, who are seeking a higher valuation between ₱22 and ₱29.

Considering that a higher valuation gives investors confidence that they are buying something assessed at fair value by a third party, a market mover suggests a more acceptable "sweet spot" valuation of ₱27.

This effectively suggests an IPO price range of between ₱18.90 and ₱24.30 per share.

Furthermore, to ensure a smooth process, the stability fund manager will play a crucial role in safeguarding the IPO's price.

How these conditions and figures play out will be interesting. It's truly a math problem.

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