By Melissa Luz T. Lopez
LAND BANK of the Philippines (Landbank) is willing to acquire the controlling stake in the country’s fixed-income exchange for a higher purchase price, compared to an earlier offer made by the local bourse operator.
The state-run bank is aggressively pursuing its plan to buy into the Philippine Dealing System Holdings Corp. (PDS), as its board of directors approved on Tuesday to acquire 66.67% of PDS “at P360 per share,” Landbank President and Chief Executive Officer Alex V. Buenaventura said in a text message to reporters.
This compares to the P320-per-share bid made by the Philippine Stock Exchange (PSE) in June 2017 for 1.489 million common shares from the Bankers Association of the Philippines (BAP).
The biggest government-owned bank is pursuing the buyout parallel to similar moves made by the PSE which started in 2013. Currently, Landbank owns 1.56% of PDS through the BAP.
The PDS group operates trading, clearing and settlement for bonds and foreign exchange, namely the Philippine Dealing & Exchange Corp., the Philippine Depository & Trust Corp., Philippine Securities Settlement Corp.
Separately, the local stock market operator PSE is looking to merge the country’s equities and fixed income bourses. Since June last year, the PSE has signed share purchase agreements with the BAP; Whistler Technologies Services, Inc.; Investment House Association of the Philippines; The Philippine American Life and General Insurance Co.; FINEX Research and Development Foundation, Inc.; San Miguel Corp. and Tata Consulting Services Asia-Pacific Pte. Ltd., giving the PSE a 69.03% total stake in PDS.
The Philippine Competition Commission approved the agreements in November, even as the Securities and Exchange Commission (SEC) initially rejected the PSE-PDS merger in 2016.
The SEC imposes a maximum of 20% industry ownership and 5% individual ownership of an exchange, but it may grant exemptions if a bigger control “will not negatively impact on the exchange’s ability to effectively operate in the public interest.”
Landbank will also request for an exemption to this rule, Mr. Buenaventura previously said, as he noted that acquiring the PDS would be a “profitable investment” for the state lender.