Taishin Financial Holding Co (台新金控), the nation's second-largest financial group by assets, said it agreed to sell NT$4 billion (US$122.88 million) in shares to QE International Ltd, a fund controlled by hedge fund tycoon George Soros.
Taishin Financial's board approved a sale of 266.7 million common shares, or a 4.67 percent stake, at NT$15 per share, lower than the NT$18 per share the bank was originally hoping for, to QE International via private placement yesterday.
"QE International outbid three other European and US bidders and offered the best terms," Taishin Financial spokesperson Carol Lai (賴昭吟) said in a phone interview.
QE International will not, however, obtain seats on the financial group's board. This is the hedge fund's first exposure to Taiwan's financial sector, she said.
Taishin Financial shares closed down NT$0.8 percent at NT$18.60 on the Taiwan Stock Exchange yesterday. The sale price represented a discount of more than 19 percent.
"The discount is reasonable, considering the required three-year lockup period and hence the liquidity risk," Lai said.
However, the offer was still lower than the market expected.
"The lower-than-anticipated price is expected to have some negative impact on the share price out of disappointment in the near future," said Shirley Yang (
The big discount could somehow reflect the buyer's conservativeness about the financial group's future, she said.
Taishin Financial said it expected the money to be injected on Wednesday with NT$6.7 billion to be allotted to its Taishin International Bank (台新銀行) in the meantime, lifting the capital adequacy ratio of the financial group and the bank above the 105 percent and 10.4 percent required to proceed with its takeover investment in Chang Hwa Bank (彰化銀行).
In response, the Financial Supervisory Commission said Taishin Financial could go ahead with the partnership with QE International.
Given that the proportion of holdings controlled by the hedge fund shop is not large and far below the required 10 percent for review of shareholders qualification, the deal is not subject to the regulator's scrutiny and advance approval, the commission said.
As the second biggest credit card issuer in Taiwan, Taishin Financial has been crippled by mounting bad consumer debts since the middle of last year.
For the first eleven months of this year, the company incurred a net loss of NT$4 billion, or NT$0.87 per share, compared with profits of NT$10.12 billion, or NT$2.03 per share, a year ago.
To strengthen its financial structure, the company sold a combined 27 percent stake to Newbridge Capital Inc and Nomura Group for a total of NT$31 billion in February.
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