LandBank bares plan to acquire majority stake at PDS

MANILA, Philippines — The president of state-run LandBank of the Philippines is planning to acquire a majority stake of the Philippine Dealing System Holdings Corp., operator of the country's bond and currency markets.

In a letter dated January 16, LandBank President and CEO Alex Buenaventura sought the board’s approval for the acquisition of at least 66.67 percent of the PDS.

He also asked the board to allow the Development Bank of the Philippines to formally engage in the transaction as the financial advisor.

“The engagement of DBP is a vital preparatory act to initiate the acquisition process,” he said.

Landbank owns 1.56 percent of PDS through the Bankers Association of the Philippines, according to Buenaventura.

At a price of P320 per share, Buenaventura said PDS is “undervalued,” adding that purchasing the country’s bond exchange shares could be a profitable investment for LandBank.

The LandBank chief said the state-run lender will benefit from “stable recurring cash flow” from fees that PDS charges to market players.

“The maturation of the domestic fixed income market, improved financial sophistication of local investors, ASEAN (Association of Southeast Asian Nations) financial integration, and a high growth economy underpinned on infrastructure development make PDS an attractive business model,” Buenaventura told the board.

“We also foresee potential synergies with LandBank’s treasury operating activities as a government securities eligible dealer,” he added.

LandBank’s plan came as the Philippine Stock Exchange continues to increase its stake in the fixed equities bourse. The PSE has raised its stake in PDS to 69.03 percent of majority ownership.