PSE acquires BAP’s 28.91% stake in PDS for million

The Philippine Stock Exchange, Inc. (PSE) is acquiring the Bankers Association of the Philippines’ 28.91 percent stake in the Philippine Dealing Systems Holdings Corporation (PDS) for million.

In a disclosure, the PSE said it has signed a share purchase agreement (SPA) with the BAP covering the acquisition of 1.81 million PDS shares at

each. Closing date of the deal will not be later than November 27, 2015.

The PDS is the holding company that owns the Philippine Dealing Exchange Corporation, the operator of the fixed income exchange. It also owns the Philippine Depository and Trust Corporation which serves as the depository for equities and fixed income securities.

“The support of the government, particularly the Department of Finance, the Bangko Sentral ng Pilipinas and the Securities and Exchange Commission, played a vital role in bringing forth this transaction,” said PSE Chairman Jose T. Pardo.

He added that “we continue to work with them to achieve our common goal of seeing a more robust Philippine capital markets.”

“We are pleased to be part of this transaction that we believe will hasten growth and progress of the country’s capital market,” said BAP president Lorenzo V. Tan.

The PSE said this transaction is envisioned to facilitate further growth in the local capital markets by introducing efficiencies in the trading and back office systems of both the equities and fixed income markets, among others.

It is aimed at creating a better environment for the introduction of more products and services for the various market stakeholders, as well as, the implementation of improvements in risk management processes.

“This agreement brings us a step closer to our goal of having a unified exchange for equities and fixed-income products. We are grateful to the BAP for all their support to finalize this deal,” said the PSE.

The consolidation of the equities and fixed-income exchanges is expected to offer additional value to issuers, investors, and other market participants at various levels. It will also provide a more competitive landscape for the Philippine capital markets.

“From a corporate standpoint, maintaining the business operations of both the PSE and PDS while reducing operational costs through synergies can result in greater business scalability and profitability,” said the PSE.

As the two companies have highly similar and integrated functions, the bourse said there should be synergies that could be realized particularly from an infrastructure standpoint, particularly on the technology side.

“For the market, the single exchange setup helps achieve efficiencies, reduce risks, and facilitate the development of new products,” said the PSE.

J. P. Morgan served as financial advisor to the PSE on this transaction.