PSE further hikes stake in fixed-income exchange

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THE PHILIPPINE Stock Exchange, Inc. (PSE) has further increased its stake in the country’s fixed-income bourse with the acquisition of Investment House Association of the Philippines’ (IHAP) shares in the Philippine Dealing Systems Holdings Corp. (PDSHC) for P11.663 million.


The PSE disclosed on Tuesday that it signed a share purchase agreement with IHAP on Aug. 25 to acquire for P320 apiece the latter’s 36,446 shares in PDSHC, equivalent to an additional 0.5831% stake.

The latest tranche brought PSE’s ownership in the fixed-income exchange to a total of 53.36%.

The price is based on PDSHC’s equity value of P2 billion.

A total of P10.72 million will be paid at the closing of the deal, while the remaining P946,303.07 will be held in escrow, according to the disclosure.

The agreement will still be subject to regulatory approvals of the Securities and Exchange Commission and Bangko Sentral ng Pilipinas.

PDSHC owns the Philippine Dealing & Exchange Corp., the Philippine Securities Settlement Corp., and the Philippine Depository & Trust Corp., the country’s sole depository for equities and fixed-income securities.

The acquisition is part of PSE’s long-standing efforts to take over the fixed-income bourse to achieve synergies in the two capital markets.

Last July, the PSE managed to get a majority ownership of the PDSHC after acquiring Whistler Technologies Services, Inc.’s eight percent stake for P160 million.

Prior to the deal with Whistler Technologies, the PSE also inked a deal with the Bankers Association of the Philippines and its affiliate companies to buy their cumulative 23.8% stake for P476.45 million.

The PSE had said in March that the goal was to own up to 67% of the PDSHC. This may include the buyout of other stakeholders led by The Singapore Exchange Ltd. with 20%, San Miguel Corp. and Philippine American Life and General Insurance Co. each with four percent, as well as the Financial Executives Institute of the Philippines Research and Development Foundation and the Development Bank of the Philippines, each with 3.08%, among others.

To proceed with the merger, the PSE has also been told by the SEC to bring down broker ownership in the bourse to 20% from 27.9% currently. Earlier this month, the PSE said it had given 52 inactive trading participants until the end of September to signify their intention to operate or else be declassified. Of these brokers, 14 hold shares in the PSE. Should the trading participants be declassified, broker ownership will be brought down to 23-24%.

The PSE has also announced plans to sell up to 11.5 million common shares out of the unissued portion of its authorized capital stock through a follow-on offering. This move is estimated to further bring down broker ownership to the SEC’s requirement.

PSE shares lost P3 or 1.25% to end P237 each yesterday. — Arra B. Francia