PSE readies P3.16-B stock rights offering

The Philippine Stock Exchange (PSE) is set to launch a stock rights offering worth as much as P3.16 billion by February, raising fresh funds to unify the country’s capital market infrastructure while diluting the shares held by stock brokers.

The Securities and Exchange Commission (SEC) recently approved the PSE’s plan to sell as much as 11.5 million new common shares to existing “eligible” investors at an offer price of up to P275 per share.

The target is to launch this offering by February, a top PSE official said yesterday.

Net proceeds from this offering will be used to repay debt to be incurred in connection with its plan to acquire Philippine Dealing Systems Holdings Corp. (PDS Group), the holding firm for fixed-income trading platform Philippine Dealing and Exchange Corp., Philippine Depositary and Trust Corp. and Philippine Securities Settlement Corp.

The PSE has so far signed deals to acquire 69.03-percent control of PDS.

Three banks—BDO, Bank of Commerce and Metropolitan Bank & Trust Co.—have opened a credit facility of P1.15 billion each for PSE’s acquisition of additional shares in PDS.

About 51 percent of the offering proceeds will be used for the PDS acquisition while 29 percent will be used to develop new products, such as trading platforms for commodities and derivatives. The remaining 20 percent will be for working capital, such as for the building fit-out of its new headquarters in BGC.

The stock rights offering will not be open to brokers to achieve the PSE’s goal of diluting the combined ownership of trading participants. This is in compliance with a provision in the securities regulation law capping single-industry ownership of any operating exchange in the country at 20 percent.

The existing four institutional shareholders of PSE were likewise requested to waive their right to subscribe to new shares. PLDT Retirement, the Government Service Insurance System and Premier Capital Venture Corp. (chaired by San Miguel president Ramon Ang) each owns 9.09 percent while San Miguel Corp. Retirement Plan owns 10.29 percent.

Among the new institutional investors that the PSE is wooing to participate in this rights offering are the Shenzhen Stock Exchange (SZSE) and state-owned pension fund Social Security System (SSS).

The PSE has mandated BDO Capital and First Metro Investment Corp. to arrange the stock rights offering.