By Lee C. Chipongian
Land Bank of the Philippines President Alex V. Buenaventura yesterday said they have begun due diligence for its planned acquisition of Philippine Dealing System Holdings Corp. or PDS after being granted reprieve from a rule by the Securities and Exchange Commission (SEC).
In a statement, Buenaventura said they will conduct due diligence after the SEC granted the state-controlled bank’s request for regulatory relief from the Securities and Regulations Code.
“With the (Landbank) board approval, the only thing left to do is to finish our due diligence and report to the board,” said Buenventura. The bank approved the purchase of 66.67 percent PDS controlling shares on January 23. “We thank the SEC for accommodating our request, even on short notice. Rest assured that we will comply with all applicable laws in acquiring PDS.”
Landbank met with SEC officials on Monday and according to the statement, Buenaventura “had a very fruitful meeting with the SEC” to talk about the application process “for a Petition for Exemptive Relief with the regulatory body.” The bank was seeking reprieve from the SEC code’s Section 33.2 (Republic Act No. 8799).
In the meantime, Finance secretary Carlos G. Dominguez III who is chairman of the Landbank board reiterated that owning majority stake of PDS is a profitable venture for the bank and the funds will be used as additional capital to be used as loans to the agricultural sector, therefore it is an inclusive undertaking.
“According to the evaluation of the Landbank management, the PDS is a profitable organization and Landbank does need profits so that it can continue to subsidize farmer loans. So it’s a valid purchase, it’s money-making plus it will allow government to push ahead with the plan to have an inclusive capital markets.”
With control of PDS, Dominguez said they could “promote the use of bonds for medium industries to tap the capital markets”.
“In simple terms we would like to use the PDS to promote the use of bonds for medium-sized industries to tap the capital markets, right now they only really have to go to banks to borrow,” DOF chief added. “But you know, there are insurance companies, there are individuals who are willing to invest their money in bonds … this is what we want to push (to open up) another venue to finance medium-sized enterprises.”
Dominguez stressed that the move of Landbank is anchored on a valid goal which is for inclusive growth through capital formation.
As for PDS’ contribution to the bank’s bottomline, this will be determined when the acquisition’s financial adviser submit its report. The price tag will also be determined and for the timetable, the government would like it to be “as soon as possible,” according to Dominquez.