Taiwanese companies with natural resource-related technologies are potential investment targets for emerging Chinese private equity (PE) funds, venture capitalists from across the Taiwan Strait told a seminar in Taipei yesterday.
“We are in search of downstream companies in Taiwan or around the world that can help beef up the competitiveness of Chinese companies in the development of natural resource or alternative energy-related industries,” Katherine Wang (王曉濱), chairwoman of Xiamen-based Power Capital Corp (萬能資本), said on the sidelines of the forum on cross-strait mergers and acquisitions (M&A).
Local companies, which are no strangers to doing business in China, would be the best partners for Chinese companies because of their experience in international markets, business know-how and branding, which would allow them to jointly capitalize on a bigger world market, including China’s domestic market, she said.
Wang said the size of yuan-denominated private-equity (PE) funds in China would grow 10-fold in five years to 1 trillion yuan (US$146.5 billion), 25 percent of which would be funded by the Chinese government.
She currently manages nearly 2 billion yuan in PE funds.
Tu Ying-tzyong (杜英宗), chairman of Citigroup Global Markets Inc’s Taipei branch, said businesses across the Strait could deepen their cooperation in the supply chain.
There was a good opportunity for the high-tech sector in both Taiwan and China to jointly develop specifications for emerging technologies such as the handset, e-paper and telecommunications industries that will be followed by the world’s manufacturers by leveraging the domestic demand in Chinese market, Tu said.
Many venture capitalists at the forum urged governments on both sides of the Strait to speed up the signing of a memorandum of understanding on financial supervision and an economic cooperation framework agreement (ECFA) to spur merger and acquisitions between Taiwanese and Chinese firms.
Once Asia becomes an important destination for global PE funds, including those in China, the Taiwan Stock Exchange would be an alternative option for small and medium-sized high-tech companies to go public, and could become the “NASDAQ of Asia,” said Huang Chi-yuan (黃齊元), vice chairman of Polaris Securities Co (寶來證券) and chairman of the Taiwan M&A and PE Council (台灣併購與私募協會).
Tu said the idea that the TAIEX could become the NASDAQ of Asia was far-fetched. It would be better for local regulators to make dual listings on the Taipei and Shanghai bourses a priority.
In his keynote address to the forum, Xiong Yan (熊焰), chairman of China Beijing Equity Exchange (CBEX), drew an analogy between Chinese, Taiwanese and Western venture capitalists and elementary, high-school and college students.
China’s PE sector was like an elementary school student who could learn from the advanced skills of the high-schoolers in Taipei, while Western competitors were like college students, he said.