PSE to dilute brokers’ ownership via stock rights offer

The Philippine Stock Exchange Inc. is now one step closer to acquiring the Philippine Dealing System Holdings Corp. after signing agreements to dilute the ownership of brokers in the exchange via a stock rights offering (SRO).

In an emailed statement on Monday, the PSE said it signed an underwriting agreement with BDO Capital & Investment Corp. and First Metro Investment Corp. on staging a stock rights offering.

“With the SRO being firmly underwritten, the SRO shares will be fully subscribed and will result in the dilution of broker ownership in the exchange to below 20 percent,” it said.

The PSE is offering 1.5 million shares to all shareholders on record as of March 1, 2018 at P252 per share. The offer period will run from March 12 to 16, 2018.

The PSE has announced plans to take over PDS Holdings and merge the fixed-income and the equities markets.

It has yet to secure approval from the Securities and Exchange Commission (SEC) which required the PSE to reduce the ownership of stock brokers in the company to 20 percent as a precondition.

Stock brokers are not allowed to join the stock rights offerings so that the SEC requirement of having no single industry owning more than 20 percent of the voting rights in exchange will be followed.

“The firm commitment of our underwriters to our SRO effectively reduces the ownership of brokers in the exchange to below 20 percent. Compliance with the Securities Regulation Code on the 20 percent maximum broker ownership in the exchange has finally been achieved,” PSE president and CEO Ramon S. Monzon said.

“The road to compliance was a long multi-step process which concludes with the SRO. It took time as part of the process involved the revocation of the trading participant status of inactive brokers and this required a period of six months to afford said inactive brokers with due process,” he said.

The PSE, which currently owns 1.311 million shares or 20.98-percent of PDS, has signed deals to buy the common shares of other PDS shareholders:

• Tata Consultancy Services Asia-Pacific Phils. Inc.—500,000 shares or 8 percent

• Whistler Technologies Services Inc.—500,000 common shares or 8 percent

• Investment House Association of the Philippines—36,446 shares or 0.5831 percent

• Philippine American Life and General Insurance Co.—250,000 shares or 4 percent

• Financial Executives Institute of the Philippines Research and Development Foundation —192,776 shares or 3.0844 percent

• San Miguel Corp. —250,000 shares or 4 percent

“We are introducing monitoring and trading mechanisms, including the necessary system automation to ensure that broker ownership limits in the exchange will no longer be breached moving forward,” Monzon said.

“Many new things are happening at the exchange and we are quite excited to enter this new chapter in our history as we work towards a more developed capital market for the benefit of the nation and the investing public,” he said. —Jon Viktor Cabuenas/VDS, GMA News