LandBank set to spend P1.5b to purchase PDEx
State-owned Land Bank of the Philippines, the third-largest lender in terms of assets, will spend P1.5 billion to acquire a 66.67-percent stake in Philippine Dealing System and Holdings Corp., the operator of the bond exchange, within the next 30 days.
LandBank president and chief executive Alex Buenaventura said over the weekend the bank expected to“lock up” the deal in 30 days, which would involve the acquisition of two thirds of 6,250,000 shares in PDS.
“If we buy 66.67 percent, that will be equivalent to 4,167,000 shares. If we buy at P360 per share, that will be a total buying amount of P1.5 billion. So that is the total amount,” Buenaventura said.
He said the board during the bank’s board meeting on Feb. 27, 2018, unanimously approved the proposal to acquire 66.67 percent of the outstanding PDS shares at P360 per share payable in cash.
Buenaventura said the unanimous approval was made in support of the government’s program for financial inclusion
“Our offer of P360 per share is 12.5-percent higher than the PSE offer of only P320 per share. The acquisition by LandBank of PDS will not only serve as a potentially profitable investment of LandBank but also more importantly aligned with the government’s capital markets development program,” Buenaventura said.
He said the state-run bank had started its due diligence for the transaction and was currently in the process of securing the necessary regulatory approvals of the acquisition.
“LandBank is serious and we intend to move fast. We plan to lock this deal up in 30 days. LandBank has also engaged the Development Bank of the Philippines as the financial adviser for the transaction,” Buenaventura said.
He said the LandBank board decided to offer P360 per PDS share after DBP presented its valuation of shares of PDS on Feb. 27, 2018.
Buenaventura said the P1.5-billion acquisition cost of 66.67 percent of PDS would come from LandBank’s existing capital. As of end-December 2017, LandBank’s total capital reached P104.59 billion, up by 23 percent year-on-year.
The bank booked a net income in 2017 of P14.05 billion, up 4 percent from P13.58 billion in 2016 on the strength of its core businesses. LandBank is the largest provider of loans to small farmers and fishers, cooperatives and local government units.
“We will offer starting next week, so that will be March 5. April 5 will be the deadline to accept the offer,” he said.
He expressed confidence LandBank would acquire the said stakes given its more attractive offer of P360 per share compared toP320 per share bid of PSE.
Finance Secretary Carlos Dominguez III also expressed optimism that LandBank would acquire 66.67 percent of PDS.
Buenaventura said LandBank had already applied for a regulatory relief with the Securities and Exchange Commission to exempt it from the 20-percent ownership cap.
He said the SEC was really supportive of “whatever will promote capital markets development.” He said LandBank’s acquisition of majority of PDS could promote capital-raising by small and medium enterprises by issuing corporate bonds.
“When we acquire PDS we will be growing the bonds issuances through LandBank branches nationwide and our account officers will be talking to our SME borrowers to raise capital by issuing corporate bonds,” Buenaventura said.
SEC chairman Teresita Herbosa said the regulator would evaluate the separate bids of tPSE and LandBank to acquire PDS.