PSE pushing through with PDS acquisition

The Philippine Stock Exchange (PSE) will proceed with its plan to acquire the Philippine Dealing System Holdings Corp. (PDSHC).

In an interview yesterday, PSE chief operating officer Roel Refran said the exchange was just awaiting the Securities and Exchange Commission’s go-signal to proceed with its planned share sale, which would enable the PSE to comply with the Securities Regulation Code (SRC).

After which, the PSE will push ahead with its plan to acquire PDSHC, the operator of the fixed income exchange.

The SEC has already approved the PSE’s follow on offering.

Refran declined to comment on Landbank’s plan to acquire controlling interest in PDSHC but simply said it would not stop the PSE from proceeding with its own plan.

However, industry sources said that while the PSE has already signed share purchase agreements with the shareholders of PDSHC, the shareholders may still entertain other offers such as that of Land

bank especially if the counteroffer is more attractive.

The PSE needs to reduce its ownership of a stock exchange to 20 percent from 27.9 percent to be able to proceed with its plan to merge the stock exchange and the fixed-income exchange.

Under the Securities Regulation Code (SRC), no single industry or business group should own more than 20 percent of an exchange.

Landbank announced Friday its plan to acquire at least 66.67 percent of PDSHC. “The maturation of the domestic fixed income market, improved financial sophistication of local investors, ASEAN financial integration, and a high growth economy underpinned on infrastructure development make PDS an attractive business model,” Landbank president and chief executive officer Alex Buenaventura said.

Refran said the PSE plans to proceed with the offering in February.

The offering will allow the PSE to allocate shares to other eligible shareholders and not to stockbrokers to achieve the PSE’s goal of diluting the combined ownership of trading participants in the PSE.

PSE was authorized to sell as much as 11.5 million new common shares at an offer price of as much as P275 per share to existing eligible investors.

Last week, Finance Secretary Carlos Dominguez, who also chairs Landbank, said the PSE “failed to comply with provisions of the SRC in relation to their plan to acquire the PDSHC.”

“The development of the capital market is being slowed down by the PSE’s protracted compliance with the law. The Duterte administration will no longer tolerate private institutions thwarting the goal of achieving a robust and inclusive financial system,” Dominguez said.

Dominguez said three months after President Duterte took office, he already told the PSE sometime in September 2016 to follow the law on the allocation of PSE shares to other shareholders so that it can comply with the 20 percent ownership limit of exchanges as mandated under the SRC.