Tue, Aug 07, 2007 - Page 12 News List

Jih Sun denies Shinsei opt out

'SPECULATION' Given the company's potential as a stepping stone into the Chinese market, dropping the relationship would make no sense for Shihsei, an analyst says

By Amber Chung  /  STAFF REPORTER

Shares of Jih Sun Financial Holding Co (日盛金控) weakened after local media said its single largest shareholder, Shinsei Bank of Japan, will offload a stake in the second smallest financial group in Taiwan.

Jih Sun shares dropped 0.38 percent to close at NT$7.96 on the Taiwan Stock Exchange (TSE) yesterday.

The company denied the report.

"This is purely speculation. We have never heard of this [Shinsei's intention to leave]," Jih Sun said in a filing to the TSE yesterday.

Shinsei invested in a 31.8 percent stake in Jih Sun last year. The strategic partnership still continues and remains effective under the terms of the binding engagement, the statement read.

The Chinese-language Commercial Times cited unidentified sources yesterday as saying that Shinsei had approached some foreign investment banks and private equity funds about selling its stocks in the Taipei-based rival.

The bank's plan would be difficult to achieve because of the three-year lockup constraint on stakes changing hands, the report said, citing Jih Sun Financial spokesman Clemens Chung (鍾芳程).

In response, Shinsei Bank said in a statement last night that it had not had any discussions with any party on the matter and would continue the partnership with Jih Sun and part of its strategic positioning strategy in Taiwan.

In May last year, the Japanese bank agreed to make a private placement of close to NT$12 billion (US$365 million), or approximately NT$6.7 per share, in the then-ailing local financial holding firm for the single largest share and three of the 11 board seats through a mix of common and preferred shares.

Jih Sun said that because of exclusivity terms in the agreement, Shinsei needed the company's approval before it could cooperate with other local financial institutions.

"So far we have not seen any obvious synergy resulting from the partnership," said Fiona Uang (汪姵吟), an analyst who tracks the nation's financial sector for Mega Securities Co (兆豐證券).

Since Shinsei managed to bring about a turnaround of its local rival and is now seeing the possibility of using its partner as a springboard to tap into the rapidly growing Chinese market, now would not be a good time to drop out of the partnership, Uang said.

EnTie Commercial Bank (安泰銀行) shares closed up 1.14 percent at NT$8 in Taipei yesterday, as its shareholders approved a fundraising plan to improve its financial structure.

The capital-strapped bank agreed in June to sell a 51 percent stake to private equity firm Longreach Group for NT$18.8 billion in a private placement.

As a result, the local lender would become a foreign-owned bank.

Shareholders yesterday agreed to lift EnTie's capitalization to NT$42.5 billion from NT$32 billion to take in the Asian buyout firm's investment.

EnTie chairman Paul Chiu (邱正雄) said that the partnership with Longreach and its financier, Orix Group of Japan, was expected to bolster the bank's know-how in high-tech industry investment and financial operations.

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