SEC to probe institutional investors of PSE

By Zinnia B. Dela Peña
The Philippine Star 06/05/2006

Institutional investors that acquired shares in the Philippine Stock Exchange (PSE) through via a private placement in 2004 may have to divest part of their shareholdings should they exceeded the minimum ownership limit for individuals as stated under the securities law, a Securities and Exchange Commission (SEC) source said.

The PLDT Beneficial Trust Fund, San Miguel Corp. Retirement Fund, Kim Eng Investment Ltd., KE Strategic Pte., Government Service Insurance System, Equinox Partners, and A. Soriano Corp. were among those subscribed to the PSE’s private offering.

Under the Sec. 33.2 of the Securities Regulation Code (SRC), no person may beneficially own or control, directly or indirectly, more than five percent of the voting rights of the exchange.

"If brokers need to reduce their shareholdings in the exchange then the other investors that subscribed to PSE shares should also do so," said the SEC source who requested not to be named.

During the time they subscribed, GSIS, PLDT Trust Fund, and SMC Retirement Fund each hold a total of 1.39 million PSE shares, equivalent to an ownership of at least 10 percent.

The PSE raised about P726 million from the private placement of its shares, which were used for the development of its infrastructure.

Brokers are required to trim their shareholdings in the exchange by July 15 in order to comply with the single industry ownership requirement under the SRC.

PSE director Vivian Yuchengco said brokers have been trying their best to comply with the SEC directive but just couldn’t get the right price for their shares.

Yuchengco said only a few brokers were willing to sell their shares to Hong Kong-based investment management firm Value Partners Ltd. at P210 each share.

Only 88,000 shares in PSE were tendered for sale by brokers to Value Partners, Yuchengco said.

Value Partners offered to buy up to five percent or around 740,258 shares of the exchange. It already owns 8,340 PSE shares bought through the open market.

Under the SRC, no single industry should own more than 20 percent of the exchange’s total outstanding capital stock. Individual investors, on the other hand, are limited to a maximum of five-percent stake each in the PSE.

According to the SEC, brokers collectively own 6.89 million shares or 45.11 percent of the outstanding PSE shares. If the PSE shares owned by individuals who are related to brokers are included, the brokers still collectively control 7.34 million shares or 48.06 percent of the total outstanding shares.

PSE president Francis Lim said the SEC could not compel the brokers to sell. "We have been trying our best to comply. It would take us more time."

The industry limitation requirement was brought about by the need to reduce brokers’ control in the bourse.

 

http://www.philstar.com/philstar/NEWS200606060704.htm