After two robust years, Taiwan will continue to be an attractive market with a reasonable valuation for private equity (PE) investors, who said that they are eyeing local companies with high-quality management teams and a stable cash flow as long-term investment destinations.
“The [local] media and telecommunications sectors have been popular [among PE firms] as they generate a stable cash flow, as well as the [domestic] manufacturing, service and financial industries,” Susan Lin (林水仙), managing director of AEA Investors (Asia) Ltd, told reporters at the sideline of a forum organized by the Asian Venture Capital Journal yesterday in Taipei.
She said political events, which might have created stock market fluctuations, would have a limited impact on investment decisions by PE firms, which will stay here for “at least three to five years” by injecting both capital and managerial expertise.
Lin, however, added that several sectors that rely on domestic consumption such as tourism, service and food-and-beverage industries, may attract more attention from PE firms. Such sectors are expected to see a pick up in demand once the new government accelerates its deregulation of China-bound investments.
Asian Venture Capital Journal statistics showed that PE investments in the local market rose to record highs of US$4 billion and US$4.9 billion respectively in 2006 and last year — a jump from the US$3 billion combined from 2001 to 2005.
An attractive equity valuation, world-class companies with strong management and readily available local currency financing at low cost will reward the local market, said Kung Kuo-chuan (龔國權), co-founder and partner of MBK Partners, at yesterday’s forum.
Kung analyzes consolidation of several key sectors where opportunities present themselves, including the financial and telecommunication industries.
As long as the local market continues to deregulate, there will still be good opportunities for PE investment in Taiwan over the next 10 years, he said.
Kung said, however, that his company is usually interested in firms with more than US$100 million in market capitalization, although smaller companies may be of interest if their prospects are good.
Speaking at yesterday’s forum, Lee Shyan-yuan (李賢源), a commissioner at the Financial Supervisory Commission (FSC), also extended the regulator’s welcome to inbound investments from multinational PE firms or venture capitalists.
“The FSC doesn’t harbor any bias against PEs, which we welcome to bring in capital,” Lee said.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to