E. Sun Financial Holding Co (玉山金控) has secured a US$200 million capital injection from Morgan Stanley Private Equity Asia and its affiliates through the issuance of euro-convertible bonds (ECBs), a company executive said yesterday.
Morgan Stanley has agreed to subscribe to US$46.2 million in ECBs later this month in exchange for a 2.5 percent stake in E. Sun Financial at NT$16.16 per share, which represents a 1 percent premium over the Taiwanese firm’s closing share price of NT$16 yesterday, said Anthony Cheng (鄭恩融), an associate in E. Sun Financial’s investor relations department.
“This investment will be long-term, running over 10 years, although Morgan Stanley will be given the right to decide whether to pull out in five years,” Cheng said by telephone yesterday.
The financial service provider will finalize a date for Morgan Stanley to subscribe to the remaining US$153.8 million in ECBs in exchange for another 7 percent stake at NT$19 per share, which represents a 18.75 percent premium, Cheng said.
Upon full conversion, E. Sun Financial’s stakes owned by foreign investors would reach almost 50 percent, from the current level of 40 percent, he said.
E. Sun Financial reported on Wednesday that its revenue last month reached NT$73.5 million (US$2.4 million), a drop of 79.26 percent from a year earlier.
During the first half of the year, the company saw revenues fall 21.54 percent to NT$1.47 billion from the same period of last year, the Taiwan Stock Exchange’s tallies showed.
Shares of E. Sun Financial have dropped 5.05 percent since the beginning of the year.
Cheng said that Morgan Stanley had shown great interest in investing in E. Sun Financial, which he said had outperformed peers in corporate governance, risk management and mortgage-lending business, as well as the growth in loans to small and medium-sized enterprises (SMEs).
As of the first quarter, E. Sun Financial had snapped up a 4.8 percent share of the home mortgage market and a 3.7 percent share in loans to SMEs in Taiwan, he said.
After Morgan Stanley’s capital injection, E. Sun Financial’s capital would rise from NT$33 billion as of May to around NT$39 billion.
Cheng said that his company planned to use the capital to expand its local businesses while seeking opportunities to facilitate mergers and acquisitions in overseas markets.
Prior to Morgan Stanley, E. Sun Financial had entered a US$400 million strategic alliance with Asia Financial Holdings Ltd, a wholly owned subsidiary of Temasek Holdings Ltd, in 2006. However, Temasek exercised its right to pull out US$267 million in March this year.
Asia Financial Holdings still holds a 6.28 percent stake in E. Sun Financial.
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