Wong plans share sale to expand glass fiber output

Winston Wong (王文洋), son of Taiwanese billionaire Wang Yung-ching (王永慶), wants to raise at least US$125 million in a share sale to expand output of glass fiber used in Apple Inc's iPod and Motorola Inc's Razr mobile phones.

Grace THW Group (宏仁企業集團) may sell a 25 percent stake in Shanghai next year, said Wong, the company's founder and chief executive officer.

Grace Group's factories in Guangzhou, Shanghai and Wuxi make plastics and components for the plates that hold semiconductors and other parts of electronic devices.

An initial public offering would give Wong, 56, funds to mount a bigger challenge to Formosa Plastics Group (台塑集團), founded and controlled by his 90-year-old father.

Wong wants to build a US$150 million furnace in China that turns sand and clay into glass yarns and a US$100 million plant that weaves them into fabrics for use in phones and computers.

"The IPO should attract buyers," said Michael On, who manages US$60 million at Beyond Asset Management Co in Taipei. "Based on the successful experience of his father's Nan Ya Plastics, the Grace Group should be able to succeed in China."

Nan Ya Plastics Corp (南亞塑膠), a Formosa Plastics unit based in Taipei, is the world's biggest processor of plastic for pipes and imitation leather. It is also the largest maker of glass fiber cloth, which is used in almost all electronics products, according to Wong, who was a senior vice president of Nan Ya until November 1995.

"Nan Ya Plastics is our biggest competitor," Wong said in an interview on Monday in his Taipei office.

Wong's Grace Group isn't affiliated with Grace Semiconductor Manufacturing Corp (宏力半導體), China's second-biggest supplier of made-to-order chips, which Wong cofounded with a son of former Chinese president Jiang Zemin (江澤民) in 2000.

Grace Group, which Wong established in southern China's Guangzhou in 1996 with backing from Nomura Holdings Inc, has been profitable since 2000, he said, declining to give details on earnings.

Grace plans to ask China's stock market regulator this year for approval to sell shares, Wong said.

The company is in talks with investment banks including UBS AG and Morgan Stanley to manage the share sale.

Grace has facilities in Shanghai able to make 10,000 tonnes of glass yarns annually and 12 million square meters of glass fiber cloth a month, Wong said.

He plans to borrow the balance of the funds needed for the post-IPO expansion in China.

"As soon as I have the money, I'll start," he said.

The new plants' capacity will be four times Grace Group's existing glass yarn furnace and triple the size of its weaving plant, boosting its glass fiber cloth capability close to that of Nan Ya Plastics' current size, Wong said.

Grace Group wants to gain from China's demand for glass fiber cloth, which increases at a "double-digit" pace annually, Wong said.

"It's good timing to list in China because of the high growth in the industry there," said Jason Lin, a Taipei-based analyst at SinoPac Securities Corp (建華證券), who has a "hold" rating on Nan Ya Plastics.

China's use of glass fiber is rising after companies including Asustek Computer Inc (華碩電腦) and Quanta Computer Inc (廣達電腦) moved production lines there from Taiwan to lower costs.