Philippine Exchange to demutualize in August

But IPO not likely until markets improve.

The Philippine Stock Exchange (PSE) says it will issue shares to 186 exchange members on August 8 this year, completing the initial step of its demutualization process.

This will see the bourse complying with rules set down in the Securities and Regulation Code enacted in August last year that called for demutualization within one year. However, there is no timetable for the second step in the demutualization process, an initial share sale to the public and listing of the company. This won’t occur until stock exchange members see some favourable market conditions that would give a reasonable valuation to their holdings.

The PSE’s Demutualization Committee completed a valuation of the exchange’s assets at the end of last year, but spokesperson Socorro Clemente says the committee has decided to not make this amount public.

The PSE is modelling its process on that of the Australian Stock Exchange (ASX), which demutualized and listed its shares on its own board in October 1998 and the Stock Exchange of Hong Kong, which did so in June 2000. Singapore followed in November last year, and all three listings have so far been successful in the aftermarket.

The Australian Stock Exchange listed at A$4.05 ($2.23), but is now trading at at A$12.91. Hong Kong Exchanges and Clearing listed at HK$3.99 ($0.51), but now trades at HK$18.75 and Singapore Exchange listed at S$1.10 ($0.63) and is now trading at S$1.35.

The PSE has received a A$300,000 grant and technical assistance from the Australian Agency for International Development’s Philippines-Australia Governance Facility, as well as $160,000 grant from the Asian Development Bank for its demutualization feasibility study.

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