The Philippine Stock Exchange said Thursday it dropped a plan to conduct a share sale and will instead conduct a stock rights offering to finance the acquisition of Philippine Dealing System & Holdings Co.
PSE said in a disclosure to the stock exchange its board of directors approved the stock rights offering to stockholders of up to 11.5 million common shares.
“This replaces previous approval of the board to conduct a public offering of the same number of shares,” PSE said.
Other terms of the stock rights offering remain to be finalized. Proceeds from the fund raising activity will be used to fund the acquisition of PDS Holdings and support the capital expenditure requirements of the exchange.
PSE earlier planned to conduct a follow-on offering which could generate up to P3 billion in proceeds.
Aside from raising funds to finance the acquisition of PDS Holdings, the follow-on offering was supposed to enable the exchange to reduce broker ownership in the stock exchange to 20 percent from current 27.9 percent as required by the Securities Regulation Code.
Under the code, no single industry or group can own more than 20 percent of an exchange.
Complying with the ownership limit is also one of the conditions earlier given by the government before it agrees to allow PSE to acquire a majority stake in PDS Holdings.
It earlier tapped BDO Capital and Investments Corp. and First Metro Investments Corp. as domestic underwriters for the offering.
BDO Capital president Eduardo Francisco said in a text message the stock rights offering could also result in the reduction in brokers’ ownership in the local bourse.
“There will be portions not taken up by existing shareholders like the trading participants so this will be offered to the market,” Francisco said.
PSE earlier said it was in talks with Shenzhen Stock Exchange for possible investments in the local bourse, a move that could also lure Chinese investors to invest in the local stock market.
PSE has been planning to acquire PDS Holdings as a part of its move to merge the equities and bond exchanges.
The merger of the two exchanges is expected facilitate further growth in the local capital markets by introducing efficiencies in the trading and back office systems of both the equities and fixed-income markets.
