PSE plans to offer more shares to bring PDS merger closer

Chris Schnabel
PSE plans to offer more shares to bring PDS merger closer
The operator of the country’s stock exchange also announces a net income drop of 7% to P345.15 million for the 1st half of this year

MANILA, Philippines – The Philippine Stock Exchange Incorporated (PSE) plans on offering more shares to bring the merger with the Philippine Dealing System Holdings Corporation (PDS) closer to fruition.

One of the stumbling blocks in the long-running saga to consolidate the country’s equity and fixed income or bond market is the 20% broker ownership in the PSE requirement of the Securities and Exchange Commission (SEC).

As such, the PSE plans to offer up to 11.5 million shares to investors to diversify its ownership structure. The exact number of shares, however, is not yet set.

“Right now, we have 73.4 million issued and outstanding shares. If you add those additional 11 million or so shares that will amount to about 8.5 million, that is enough to diversify ownership and dilute the levels of broker ownership given its current levels,” said PSE chief operating officer Roel Refran in a briefing on Wednesday, August 2.

At the moment, broker ownership in the PSE is below 30%. Refran noted that it used to be above 30%, “but the exact level is the subject of our discussions with the SEC since there are a lot of ongoing efforts to clean up inactive brokers which has a direct bearing on their owner percentage.”

Refran said the offering will be held within the year, with October penciled in as the earliest date.

The PSE, which currently has a 20.98% stake in PDS, is also working on several transactions as it tries to consolidate ownership.

One of these transactions is an agreement to buy the 23.8% stake of the Bankers Association of the Philippines (BAP) in PDS which was announced last June.

Net income down for H1 2017

The PSE also announced that its net income hit P345.15 million for the 1st half of this year, down by 7.4% from the P372.70 million posted in the same period last year.

The firm attributed the weaker performance in H1 2017 to lower income from sources other than listing and trading, which declined to P77.54 million from last year’s P156.41 million on the absence of a non-recurring income from the prior period as well as a rise in expenses of 10.9%.

Despite this, the PSE’s operating revenues for the period rose by 18.1% to P662.53 million from P560.81 million in the previous year, which the firm attributed to double digit gains in listing- and trading-related fees.

Listing-related income went up by 37.2% on the back of initial public offerings (IPOs) and stock rights offerings during the January to June period.

Trading-related income, meanwhile, registered a 12.2% increase on higher trading volume while average daily value turnover at the end of the semester was at P8.08 billion from P7.51 billion in the same period last year.

Service fees from the Securities Clearing Corporation of the Philippines also rose by 6.7%.

“The favorable investment backdrop provides basis for more trading and listing activities. This should support further growth in our revenues,” said PSE president and chief executive officer Ramon Monzon.

Capital raised in the 1st 6 months of 2017 amounted to P106.74 billion, 92% higher than the P55.59 billion raised in the same period last year.

So far, Eagle Cement, Cebu Landmasters, and Wilcon Depot have listed on the PSE this year. Chelsea Logistics has also finished its IPO and is set to be listed on August 8. –

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