Landbank eyes 49% stake in PDS before 2019 ends

MANILA, Philippines – The state-run Land Bank of the Philippines is eyeing to acquire a 49-percent stake in Philippine Dealing System Holdings Corp. (PDS) before this year ends to become the biggest shareholder in the bond trading platform.

“We are working on the regulatory clearances, and we hope to finish it [the acquisition] within the year,” Landbank president and chief executive Cecilia C. Borromeo told reporters in a chance interview Wednesday.

Borromeo said they were already seeking clearances from the Bangko Sentral ng Pilipinas (BSP), Governance Commission for Government-Owned or Controlled Corporations (GCG), and the Securities and Exchange Commission (SEC) for the transaction.

The Landbank chief said the offer price to buy PDS shares from other shareholders at P215 per share stays, based on the lender’s updated valuation.

So far, Landbank secured the commitment from about 21 percent of shareholders, she said.

Borromeo said they wanted to secure a maximum of 49-percent stake “because we don’t want it [PDS] to become a GOCC [government-owned and/or -controlled corporation].”

She explained that if PDS becomes a GOCC, “the regulations will be very different—COA [the Commission of Audit] will audit it.”

Borromeo said Landbank wanted PDS to remain private-run “but we are a shareholder of that private entity.”

Asked if Landbank was no longer eyeing a majority stake of at least 51-percent share to control PDS, Borromeo replied: “We are in the process of conducting legal due diligence to assess the full implication of a potential 49-percent stake in PDS.”

She said the transaction was expected to be finished by the fourth quarter.

Former Landbank chief Alex V. Buenaventura earlier extended by three times the deadline to buy PDS shares until Borromeo took over as head of the state-run lender.

In March, Borromeo said Landbank was “taking into serious consideration the proposed amendments and extension requests we’ve received from various stakeholders.”

The downgraded offer, from P360 a share previously, had taken into account the P600 million in dividends that PDS issued to shareholders in June last year, which reduced PDS’s asset value.

The share price nonetheless remained a multiplier of 1.5 times adjusted net asset value or the same as the previous offer.

During the initial offer in March last year, only 43 percent of shareholders submitted acceptance letters.

At present, Landbank owns 1.56 percent of PDS through the Bankers Association of the Philippines (BAP).

Landbank’s plan to acquire a majority stake in PDS runs counter to the latter’s planned but long-delayed merger with the Philippine Stock Exchange (PSE).

The PSE had rejected Landbank’s offer to buy its stake in the capital market infrastructure provider PDS, as it found Landbank’s offer of P281.96 million for its 20-percent stake “too low.”