THE Philippine Stock Exchange (PSE) is “more confident” of closing the long-standing proposal to merge with fixed-income trading platform operator Philippine Dealing Systems Holdings Corp. (PDS) within the year given the increasing support of various stakeholders.
“We’re more confident than last time because one, we’ve been talking [about]this with them [regulators]for the last nine months now, so there have been a lot more back-and-forth. I think also that the signals are there, let’s call it senior support from various stakeholders,” PSE President Hans Sicat said in a briefing late Friday.
In March last year, the Securities and Exchange Commission (SEC) rejected the PSE’s request for an “exemptive” relief to own more than 20 percent of PDS, citing that “the PSE has not determined synergies and efficiencies that will indeed translate to meaningful benefits to the investing public and issuers. Without sufficient basis, the commission cannot grant PSE [an]exemption.”
Under corporate laws, an entity is limited to own only up to 20 percent of an exchange due to competition concerns.
The Philippine Competition Commission (PCC) will be joining the SEC in assessing the P2.25-billion PDS buyout of the PSE.
Sicat said they sought the help of existing PDS shareholders over the past few months in drafting a term sheet that would detail the terms and conditions of the acquisition of their PDS stakes.
“The game plan is to basically have a formal signing, which can happen in next few weeks,” the PSE president said.
“We’re working with the regulators with constant updates, but we also agreed that the final form will be dependent on the term sheet, the commercial agreement,” he said.
“I don’t want to jinx it, but I guess we’ll end up with some of the businesses, maybe not all the business. So, we’ll see how all of these get done. We’re hoping sooner is better than later,” he added.
The PSE has been reviving the P2.25-billion proposed merger since December last year. At present, the PSE owns 20 percent of PDS, which is the umbrella holding company for the Philippine Dealing and Exchange Corp. (PDEx), the Philippine Depository and Trust Corp. (PDTC) and Philippine Securities Settlement Corp.
It was in early 2015 when the PSE first applied for PDS acquisition. PSE eventually cornered selling agreements with the Bankers Association of the Philippines (BAP), which holds 28.9 percent of PDS, and various minority shareholders, which own a collective of 31.1 percent. But PSE failed to secure a deal with the Singapore Exchange Limited (SGX), which holds a 20 percent stake in PDS.
Sicat said the PSE will fund the acquisition, if it materializes, through bank borrowings.