The Philippine Stock Exchange (PSE) is positive it will finalize deals to own at least a 67 percent stake in Philippine Dealing System Holdings Corp. (PDS) by end-July to enable it to integrate the equities and fixed income trading platforms in the country.
Hans B. Sicat, PSE president and chief executive officer, said his confidence was based on the PSE’s close cooperation with the Securities and Exchange Commission (SEC) and the Philippine Competition Commission (PCC).
“We’re talking to all other stakeholders, then we’ll continue to talk to the SEC and the PCC… It depends on how fast the other stakeholders are going to sign the share and purchase agreements (SPA) … we need 67 percent,” Sicat told The Manila Times after the 12th PDS Awards Night on Thursday last week.
“[The response from regulators] is reasonably good. We’ve been updating them often. So hopefully, no more surprises. For closing, I think [we see it by]end of July,” he added.
Last week, the PSE signed the term sheet with the Bankers Association of the Philippines (BAP), laying down the terms of conditions of the bourse’s acquisition of the BAP’s 28.9 percent stake in PDS. The deal is expected to raise the PSE’s stake in PDS to 48.9 percent.
PDS is also owned by other stakeholders besides the BAP, including the Singapore Exchange Limited, which holds 20 percent, and minority shareholders such as Finex Research and Development Foundation Inc. with 3 percent, Whistler Technologies Services Inc. with 8 percent, and Insular Investment Corp. with 0.06 percent.
The PSE owns 20.98 percent of PDS, which is the umbrella holding company of the fixed-income trading platform, Philippine Dealing and Exchange Corp. (PDEx). PDS also owns the Philippine Depository and Trust Corp., which serves as the depository for equities and fixed-income securities, as well as the Philippine Securities Settlement Corp.
It was in early 2015 when the PSE first applied for PDS acquisition, and was keen on acquiring the shareholdings of all the other stakeholders of the fixed trading platform operator.
The PSE then requested an exemptive relief with the SEC from the 20 percent ownership limit of an entity in an exchange. But the corporate regulator announced it would not grant the relief in 2016, citing anti-competitive factors.
Since the start of 2017, the PSE has been trying to expand its interest in the PDS, working closely with the regulators.
Sicat said the exchange has since changed the term sheet, saying that they “would not be taking the government securities portion of the PDEx” due to its current lawsuit charges.
Earlier reports have said a PDS buyout would now cost P2 billion – from a previous P2.25 billion estimate – due to the removal of the government securities portion.
Sicat also said earlier the exchange would fund the acquisition through borrowing from existing bank credit lines.