UPDATE: Carlyle-Led Group Shelves Plan To Sell Ta Chong Stake - Sources
May 28 2012 - 8:25AM
Dow Jones News
TAIPEI (Dow Jones)--A Carlyle Group L.P. (CG)-led consortium has
shelved its plan to sell a controlling stake in Taiwan's Ta Chong
Bank Ltd. (2847.TW) because the offers from potential buyers didn't
meet the seller's expectation, according to people familiar with
the situation, casting doubt on other pending private-equity exits
in the island's banking industry.
Carlyle and the Chen family, a major shareholder of Ta Chong,
were looking to sell a combined stake of around 70% in the
medium-sized Taiwanese bank. Based on the bank's US$789 million
market capitalization as of Monday, the stake would be valued
around US$552 million. The seller hired Barclays Capital and JP
Morgan to handle the sale, the people said, declining to disclose
the dollar value of the offers.
Carlyle first bought into Ta Chong in July 2007 at NT$17.00
apiece, when the share price stood at NT$12.45. It has been trading
below Carlyle's purchase price since then, hovering between NT$3.09
and NT$13.80. Shares of Ta Chong closed at NT$10.20 Monday, at a
price-to-tangible book value of 1.1 times, according to S&P
Capital IQ.
Banks in Taiwan are among the least profitable in Asia, as net
interest margins have remained in the very low single digits due to
a crowded market. Earnings are also weighed down by the tight
capital requirements imposed by the regulator in recent years.
Some bankers said dismal earnings growth and share price
performance have forced foreign investors to either sit on their
investments or to exit without making profits, or even with
losses.
The last private-equity sale in Taiwan's banking industry was by
TPG Inc., which trimmed its stake in Taishin Financial Holding Co.
(2887.TW) to 6.55% from 14.82% late last year at NT$18.30 apiece,
little changed from the NT$18.00 apiece it paid for the stake in
2006.
Tokyo-based Longreach Group has hired Morgan Stanley to explore
a sale of its stake in En Tie Commercial Bank, a small local
lender. Cosmos Bank, another small bank, counts as its shareholders
SAC Private Capital Group LLC and GE Money, which haven't indicated
what they intend to do with their investment.
In Carlyle's planned exit, two potential buyers had
emerged--Fubon Financial Holding Co. (2881.TW) and Yuanta Financial
Holding Co. (2885.TW)--but the sale was called off on Friday, the
people said. The separate proposals from Fubon and Yuanta involved
swapping the respective company's shares for a controlling stake in
Ta Chong Bank, the people said, declining to disclose specific
terms.
The people said the recent decline in global stock markets is
the main reason behind the shelving of the deal.
One of the persons added that both Fubon and Yuanta planned to
acquire Ta Chong and merge it with their own financial
conglomerates, but the Chen family's "emotional attachment to Ta
Chong" has been one of the obstacles to the sale.
Ta Chong confirmed Monday both Fubon and Yuanta had been dropped
from the process. It didn't elaborate.
-By Aries Poon, Dow Jones Newswires; 886-2-25022557;
aries.poon@dowjones.com
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