The Philippine Stock Exchange will need to sell at least P5 billion worth of new shares to dilute brokers’ ownership in the local bourse to 20 percent.
PSE president and chief executive Ramon Monzon said in an interview at the sidelines of a recent forum the exchange remained committed to complying with the ownership limit even with the failed acquisition of Philippine Dealing System and Holdings Corp., the operator of the fixed income market.
The PSE said it might have to resort to issuing new shares to dilute the ownership of brokers in the exchange, noting that brokers were not willing to sell out.
“My computation is that we need to raise another P5 billion of new money in order to dilute the brokers,” Monzon said.
“We have tried to convince many brokers to sell but they don’t want to sell. So the only way to achieve that objective is to again dilute the shareholders, which means issuing more shares,” he said.
Monzon said the economic climate should be attractive before the sale of new PSE shares.
“If we are going to issue new shares, the economic climate has to be correct because we want new investors to invest. Right now we are not yet at that point,” Monzon said.
The PSE is set to seek shareholders’ approval on the sale of preferred shares during the annual stockholders’ meeting to trim brokers’ ownership in the exchange.
The PSE plans to sell preferred shares by reclassifying 14 million unissued common shares with a par value of P1 apiece.
The Securities Regulation Code states that “no person may beneficially own or control, directly or indirectly, more than five percent of the voting rights of the exchange and no industry or business group may beneficially own or control, directly or indirectly, more than 20 percent of the voting rights of the Exchange.”
Monzon, meanwhile, said the PSE remained keen on integrating fixed income with the equities exchange with the acquisition of PDSHC.
“But we are waiting with what LandBank will do because we have taken the position that we will not compete with the government agency,” Monzon said.
Land Bank of the Philippines earlier offered to acquire PDSHC. The offer to acquire expired on March 15 with no takers.
The PSE earlier offered to acquire PDSHC but was not able to obtain an exemptive relief from the Securities and Exchange Commission.
The executive relief is needed to enable PSE to acquire more than 20-percent interest in PDSHC.