PSE eyeing to finish PDS takeover this year

The Philippine Stock Exchange (PSE) said it is hoping to finalize the planned takeover of the Philippine Dealing System Holdings Corp. (PDS) within the year.

“I hope it could be closed by this year. This is not complicated. We will only talk to a few shareholders,” PSE President and Chief Executive Officer Ramon S. Monzon told reporters during a GCash media event last week.

The PSE is eyeing to acquire up to 100% of the PDS, the operator of the Philippine Dealing & Exchange Corp. (PDEx) that caters to the fixed-income market.

However, Mr. Monzon said that negotiations have not started because the power of attorney of the Bankers Association of the Philippines (BAP) has expired.

“The BAP is currently renewing that with the banks. Until that happens, I don’t want to talk to 24 different sectors. So we’re waiting for that. Everybody is doing their due diligence work now,” he said.

The PSE has a 20.98% stake of the issued and outstanding capital stock of the PDS Group.

Some of the other PDS shareholders include Singapore Exchange Ltd. (20% share), Whistler Technologies Services Inc. (8% share), Tata Consultancy Services Asia (8%), San Miguel Corp. (4%), Financial Executives Institute of the Philippines Research and Development Foundation (3.08%), and Social Security System (1.54%).

Meanwhile, Mr. Monzon said the PSE could secure a loan for the planned acquisition.

“We have some funds for that. I think we’ll have to probably take out a loan, depending on what the final price is,” he said.

In December last year, the Securities and Exchange Commission (SEC) granted the application of the PSE for exemptive relief, allowing it to exceed the mandatory ownership in PDS.

This means that the PSE is now allowed to exceed the mandatory limit of 20% on ownership and voting rights in an exchange, permitting it to own up to 100% of PDS, subject still to certain conditions.

The SEC’s move allows unified or integrated local bourses, referring to a financial market where assets like stocks and bonds are traded under a single entity as part of developing the country’s capital market.

Under the Securities Regulation Code, no industry or business group may beneficially own or control, directly or indirectly, more than 20% of the voting rights of the exchange.

In 2017, the PSE almost completed its takeover of PDS. However, the SEC blocked the transaction as it would breach the individual ownership limit provided under the law. — Revin Mikhael D. Ochave