PSE to sell common shares to reduce broker ownership

MANILA, Philippines – The Philippine Stock Exchange (PSE) plans to sell 11.5 million common shares through follow-on offering, which could potentially raise as much as P2.8 billion in fresh capital.

In a disclosure on Thursday, July 20, the PSE said its board authorized the issuance  of 11.5 million common shares out of the unissued portion of the company’s authorized capital stock offered to the public.

The share sale is part of the company’s move to reduce to 20% brokers’ ownership in the stock exchange as prescribed under the Securities Regulation Code (SRC).

Other details of the share sale, including the timetable, have not been finalized.

Based on the PSE’s closing price of P245 per share on Wednesday, July 19, the sale of 11.5 million common shares will generate as much as P2.8 billion.

The local bourse said it will use the proceeds from the fund-raising activity for the acquisition of PDS Holdings Corporation and working capital requirements of the exchange.

The PSE has been planning to acquire majority stake in PDS Holdings, which serves as the holding firm for fixed-income trading platform Philippine Dealing and Exchange Corporation (PDEx), Philippine Depositary and Trust Corporation (PDTC), and Philippine Securities Settlement Corporation.

The PDS acquisition has been valued at P2 billion.

Monzon’s focus

Newly-elected PSE president Ramon Monzon earlier said he will focus on two major programs this year. These plans involve reducing brokers’ ownership in the stock exchange to 20% and completing the PDS Holdings acquisition.

At present, stockbrokers still own about 27.9% stake in the local bourse. (READ: New PSE president to focus on PDS merger, lowering broker ownership)

The Securities and Exchange Commission (SEC) earlier gave the PSE until this year to comply with the ownership limit.

The PSE is mulling several options to comply with the 20% ownership limit, among them, asking brokers to sell to non-brokers, private placements, and offering preferred voting shares. 

Since 2005, the SEC has been pushing the PSE to limit the ownership of stockbrokers in the exchange to 20% to comply with the single industry ownership requirement under the SRC.

However, PSE has failed to comply despite several reminders, warnings and extensions for compliance. In 2007, the SEC imposed a fine of P100,000 against the PSE and P100-fine for every day of delay. – Rappler.com