SEC expected to bless PSE, PDS union

The Philippine Stock Exchange (PSE) is optimistic that its renewed bid to merge with the Philippine Dealing Systems Holdings Corp. (PDS Group) and unify the country’s capital market infrastructure will soon be cleared by the Securities and Exchange Commission (SEC).

The PSE hopes to seal its acquisition of PDS—the holding firm for fixed-income trading platform Philippine Dealing and Exchange Corp., Philippine Depositary and Trust Corp. and Philippine Securities Settlement Corp.—before the year’s end or by the first quarter of 2018.

“I hope it will happen before the end of the year,” PSE president Ramon Monzon said in a recent press chat. PSE chair Jose Pardo, for his part, said he was eyeing a formal union by the first quarter of 2018.

The Philippine Competition Commission (PCC), the country’s antitrust body mandated by law to review mergers and acquisitions to ensure the deals will not prejudice the interest of the consumers, has recently cleared this transaction. The next hurdle is to get the SEC to agree to lifting the 20-percent mandatory cap on stock brokers’ ownership of the PSE.

The PSE has filed at the SEC its registration statement (RS) for the issuance of 11.5 million new shares to existing shareholders.

“This stock rights offering will not be open to the brokers. In effect, there will be a forced dilution of the brokers’ [ownership] because we increased the number of shares,” Monzon said.

“In our computation, with 11.5 million shares that we’ll be offering as stock rights, we believe the final ownership of the brokers in PSE will be a little less than 20 percent,” he explained.

Monzon added the existing institutional shareholders of PSE were likewise requested to waive their preemptive rights.

There are four big institutional investors in PSE. PLDT Retirement, Government Service Insurance System and San Miguel president Ramon Ang-chaired Premier Capital Venture Corp. each owns 9.09 percent. San Miguel Corp. Retirement Plan owns 10.29 percent.

It was earlier reported that Shenzhen Stock Exchange (SZSE) was among the institutional investors that PSE tried to woo.

“Since we’re offering 11.5 million shares, we’re trying to interest them to invest for the stock rights, then we can work together for a strategic partnership,” Monzon said.

The PSE has mandated BDO Capital and First Metro Investment Corp. to arrange the stock rights offering, Monzon said. Book-building is expected to start by January while listing of shares is targeted by February.

No single entity can own more than 5 percent of PSE so in case SZSE decides to invest, it can only buy up to 5 percent. In the case of the four other existing institutional shareholders of PSE, which all have larger interests, they were given exemptive relief a long time ago when the then newly-demutualized PSE started to diversify ownership.