IBT might offer 30 percent of holdings

The Industrial Bank of Taiwan (IBT, 台灣工銀), one of the nation's three industrial banks, is considering selling up to 30 percent of its stake to foreign investors via private placement in return for added value and know-how, the company said yesterday.

"Several foreign banks and private equity funds have approached us for equity investment and some of them have undertaken the due diligence," IBT chairman Kenneth Lo (駱錦明) said at a media event yesterday.

Lo, who used to be president of Chinatrust Commercial Bank (中國信託商銀), established the industrial bank in 1999 to provide loans and give financial advice to corporate customers.

The bank's strong profitability last year can back up its bid for a good price, Lo said.

The veteran banker declined to comment on a preferred sale price, implying that buyers have paid a price of 2.6 times to over 3 times the amount of a takeover targets' book value in previous mergers and acquisitions (M&A).

IBT currently has a book value of over NT$11 per share, the bank said.

Going public

Going public in the Taiwan Stock Exchange will no longer be an option if strategic foreign investors are introduced into the bank, Lo said.

IBT generated net earnings of NT$943 million (US$28.5 million), or NT$0.39 per share, last year after writing off bad debts exceeding NT$1 billion incurred from Rebar Asia Pacific Group's (力霸亞太企業集團) financial problems.

The industrial lender decided to issue a dividend of NT$0.25 in cash to shareholders this year. Profits are expected to at least double from last year, as earnings in the first quarter look set to match the annual level of last year, Lo said.

With IBT Securities Co (台灣工銀證券) and IBT Asset Management Co (台灣工銀投信) under his business umbrella, Lo said the lender will continue to expand into other financial segments this year, including asset management through M&As.

Venture capital

IBT plans to raise US$100 million for its venture capital arm, which has invested in 65 companies with 37 of those having successfully gone public on stock markets, Lo said.

The bank has obtained the US Federal Reserve's permission for its buyout of EverTrust Bank for US$65.5 million and is scheduled to reopen the Los Angeles-based lender next month, he said.

The US subsidiary, coupled with its footing in Taiwan and Hong Kong, is expected to complete IBT's platform to fulfill needs of overseas Taiwanese firms that seek expansion worldwide, Lo said.