PSE in talks with local, foreign investors for sale of 40% equity

The Philippine Stock Exchange (PSE) is in talks with a number of foreign and local investor groups for the purchase of the remaining 40- percent equity it needs to dispose off to fully comply with the shareholder ownership limitation rule under the Securities Regulation Code.

Securities and Exchange Commission (SEC) chairman Lilia R. Bautista said the PSE is holding negotiations with one local investor and two foreign investor groups whom she refused to identify. "I was informed that the PSE is currently in talks with these potential buyers," she said.

The SEC has been egging on the PSE to bring down brokers’ shareholdings to 20 percent to comply with the SRC. Despite the recent sale of 40 percent to institutional groups, the PSE is still majority-owned by brokers.

Under the SRC, no individual can own more than five percent of an exchange and no industry or group can hold more than 20 percent.

The first 40-percent block of PSE shares was sold to the Government Service Insurance System (GSIS), the PLDT Beneficial Trust Fund, San Miguel Corp. Retirement Fund, Kim Eng Investment Ltd., KE Strategic Pte. Ltd., Equinox Partners and publicly-listed A. Soriano Corp. ATR-Kim Eng Capital Partners Inc. handled the private placement of PSE shares.

The shares were sold at P119.50 per share, below the current price range of P150 to P200.

The PSE raised about P726 million from the private placement of its shares which it plans use for the development of its infrastructure to support business efficiency and for additional working capital. Other proceeds will also be used to address other concerns that benefit the shareholders.

The GSIS, PLDT Trust Fund, and SMC Retirement Fund now each hold a total of 1.39 million PSE shares, equivalent to an ownership of at least 10 percent.

This move came after the SEC Commission called the attention of the Exchange that only 0.75 percent of the PSE shares have been traded a month since its listing. The Commission, thus directed the PSE "to take the necessary steps" to immediately observe the limitations set in the SRC.

The exchange listed 9.2 million of its shares on the local bourse in December 2003 as an initial step towards demutualization.

PSE said the sale of shares to institutional investors will be a major leap towards achieving full demutualization and bringing the PSE at par with the other demutualized and listed exchanges in the region such as the Australian, Hong Kong and Singapore stock exchanges and even ahead of other exchanges in Southeast Asia.