The Philippine Stock Exchange Inc. (PSE) is moving closer to its goal of unifying the country’s capital market infrastructure through the acquisition of the Philippine Dealing System Holdings Corp. (PDSHC).
On Wednesday, the PSE signed a term sheet with the Bankers Association of the Philippines (BAP) signifying the exchange’s intent to acquire BAP’s 28.9 percent stake in the dealing system.
In a statement to the Securities and Exchange Commission (SEC) dated March 8, PSE Inc. said it and BAP have signed an agreement to resume discussions on the purchase by PSE of BAP’s 1.8 million common shares of stock in PDS Holdings Corporation, equivalent to 28.9 percent of the total issued and outstanding stock of PDSHC, “subject to certain terms and conditions, one of which is the obtainment of the requisite approvals from the Securities and Exchange Commission and other regulatory agencies.”
“The parties also agreed to execute an amended Share Purchase Agreement not later than 31 May 2017,” the statement said.
The agreement with the BAP is in line with PSE’s goal of taking over the PDS in order to unify the equities and fixed-income trading platforms in the country.
“This occasion underscores our commitment to see a unified equities and fixed-income exchange. We remain cognizant of the advantages of this consolidation to capital market stakeholders and the Philippine economy and we hope to realize these benefits the soonest possible time,” PSE President and Chief Executive Officer Hans B. Sicat said.
For his part, BAP President Nestor V. Tan said, “We welcome this opportunity to bring this deal into completion with the PSE. BAP remains supportive of the goal to have a more efficient financial market through this transaction.”
PSE currently owns 20.98 percent of PDS, which is the holding company for fixed-income trading platform Philippine Dealing and Exchange Corp. (PDEx), the Philippine Depository and Trust Corp., and the Philippine Securities Settlement Corp.
The PSE has been working closely with the SEC and the Philippine Competition Commission (PCC) to ensure the success of the transaction, particularly after the SEC in March last year rejected the exchange’s request for “exemptive” relief to own more than 20 percent of PDS.
The PSE estimates that its proposed acquisition of PDS would cost P2.25 billion. Sicat earlier said the exchange will fund the acquisition through borrowings from banks.