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Carlyle scraps Ta Chong bank sale after bidders Yuanta, Fubon pull out

28 May 2012

Global buyout giant Carlyle Group has scrapped plans to sell its 40 per cent stake in Taiwanese bank Ta Chong after two high-profile bidders pulled out of the process.

The firm hoped to sell its controlling stake alongside 30 per cent belonging to the Chen family, but called a halt after finance houses Yuanta and Fubon were both unwilling to meet the sellers’ valuation, according to Reuters.

Carlyle bought a 35 per cent stake in Ta Chong for about $729m in 2007 but has failed to generate satisfying returns, reflecting private equity firms’ general disappointment with Taiwan’s notoriously low-margin financial services sector.

The combined stakes would have been worth about $566m based on the current market capitalisation of $807m.

Carlyle is not the only private equity firm looking to exit its investments in the Taiwanese finance sector, with Tokyo-based Longreach looking to sell its $440m stake in En Tie Commercial Bank.

But the failed Carlyle sale now casts doubt on whether Longreach and others will be able to complete their own deals.

Return on assets from Taiwan’s banks was just 0.53 percent in 2011, the lowest among banks in Asia excluding Japan, according to Fitch Ratings in Taiwan.

Carlyle agreed the sale of Taiwanese cable TV unit Kbro to Dafu Media in November 2010 following a failed bid by Taiwan Mobile.

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