The Philippine Stock Exchange (PSE) may tap the debt market to buy out the shareholders of Philippine Dealing System Holdings Corp. (PDS).
PSE president and chief executive Ramon Monzon said while the local bourse has funds to finance the acquisition, it may still need borrow funds to close the deal, depending on the final offer price.
Monzon expects the deal to close within the year.
The PSE owns 20.98 percent of the issued and outstanding capital stock of PDS Holdings, the operator of the country’s fixed-income trading platform.
The PSE seeks to acquire up to 100 percent of PDS to unify the capital markets.
Monzon said that while the PSE obtained regulatory approval for the planned buyout, the negotiations with PDS shareholders has yet to start. He said the Bankers Association of the Philippines (BAP), one of the biggest shareholders of PDS, has yet to secure power of attorney from member banks.
“We have not started the negotiations now because the power of attorney that the banks gave to BAP has expired. So the BAP now is renewing that with the banks. Until that happens, I don’t want to talk to 24 different sectors,” Monzon said.
Other shareholders of PDS include Singapore Stock Exchange, Whistler Technology, Tata Consulting, San Miguel Corp. and Financial Executives Association of the Philippines.
The Securities and Exchange Commission (SEC) granted the PSE an exemptive relief in December that will enable it to acquire full ownership in PDS.
The exemptive relief allow the PSE to breach the 20-percent cap in the ownership of a single industry in an exchange.
The PDS Group includes the Philippine Dealing & Exchange Corp. (PDEx), which operates the organized secondary market for the trading of fixed-income securities issued by corporations and the government.
A merger of the equities and fixed income market exchanges is being pushed to expand the volume of trades and improve the country’s capital markets.