PSE lowers brokers’ ownership to 21.38% after stock rights offering

The Philippine Stock Exchange Inc. has reduced brokers’ ownership of the bourse to 21.38 percent on the heels of a stock rights offering that brings the exchange a step closer to acquiring the Philippine Dealing System Holdings Corp.

The reduction of brokers’ ownership to 21.38 percent from 23 percent is still above the 20 percent requirement for the PSE to secure regulatory approval in acquiring the fixed-income market operator.

The Securities and Regulation Code does not allow any industry or business group to beneficially own or control, directly or indirectly, more than 20 percent of the voting rights of the exchange.

On the sidelines of the ceremonial listing of the PSE’s 11.5 million shares on Thursday, PSE president and CEO Ramon Monzon told reporters that the exchange is working on revoking inactive brokers that on record own around 2.2 percent of the PSE.

The PSE 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.

“We have written a letter to SEC for exemptive relief, saying we complied with a compliance plan on how to reduce it,"” Monzon said.

Apart from meeting the SEC’s precondition, the PSE’s plan to unify the stock and fixed-income exchanges appeared to be meeting resistance as state-owned Land Bank of the Philippines has also taken steps to acquire PDS Holdings.

“We still want to unify, but obviously Landbank is pursuing it ... and we should not be engaging the government in a bidding war,” Monzon said.

He noted that the share purchase agreements signed with various shareholders of PDS Holdings are expiring on March 31, 2018.

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

• 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 could [extend] if we wanted to, but we don’t know if that’s the right thing to do. What is the extension for? What will change?” Monzon said.

He said that though the PSE is still keen on acquiring PDS Holdings, but it is beyond their control if they can get regulatory approval before LandBank gets it.

“We have a board meeting on April 11, where all of this will be discussed,” Monzon said. —VDS, GMA News