KGI might raise holding if Diana Chen loses fight

KGI Securities Co (中信證券) may increase its stake in China Development Financial Holding Corp (中華開發金控) if the brokerage succeeds in taking the helm of China Development during a shareholders' meeting next month, a company executive said yesterday.

"It'll be a big investment to signify KGI's recognition of China Development's new board and management team," KGI president Angelo Koo (辜仲瑩) said.

KGI is already the biggest shareholder in China Development with a 6.2-percent stake. It started buying China Development shares last September.

Koo did not specify yesterday how many additional China Development shares KGI is considering buying, but he said that the move is aimed at creating more transparency and maximizing shareholder value.

China Development, the nation's fifth-largest financial services company, is scheduled to hold a shareholders' meeting on April 5 to elect a new board.

To lobby smaller shareholders for their proxy votes, KGI has gained support from the government and from private shareholders including Yuen Foong Yu Group (永豐餘集團), Acer Inc, Inventec Corp (英業達), Nice Enterprise (耐斯企業) and others.

Koo, who is the second son of Chinatrust Financial Holding Co chairman Jeffrey Koo (辜濂松), spoke yesterday for the first time of his interest in taking over China Development's chairmanship.

"If enough support is secured, I may consider [competing for the chairmanship]," he said.

China Development chairwoman Diana Chen (陳敏薰) is now seeking proxy letters from individual shareholders to support her re-election bid at the April 5 meeting. But local media have speculated widely that Koo intends to be aggressive about toppling Chen, whose Lilontex Corp (理隆纖維) owns less than a 1-percent stake in China Development.

Koo said KGI's net assets have grown from approximately NT$2 billion in 1997, when he took over, to over NT$20 billion today.

"We've succeeded in creating the biggest benefits for our [KGI] shareholders," Koo said.

The company has set a target for earnings-per-share of NT$2 per share for this year, which would push the company's net assets to NT$30 billion by year's end, Koo added.

KGI has been stepping up its criticism of China Development's management team, saying the team has underperformed.

Last week, two board candidates nominated by KGI said that China Development, with a total of NT$90 billion in domestic and overseas re-investments, makes NT$15 billion in annual capital gains.

But China Development president Chao Yuan-chi (趙元旗) rebutted this criticism on Tuesday, saying that the company's profit performance in January was better than its target of NT$180 million, and that the company had made an after-tax profit of NT$1.35 billion.