Tue, Sep 21, 2010 - Page 12 News List

Cross-strait mergers and acquisitions to rise: forum

By Crystal Hsu  /  STAFF REPORTER

More acquisition and merger opportunities are expected across the Taiwan Strait after the signing of the Economic Cooperation Framework Agreement (ECFA), but more liberalization is needed to facilitate their realization, panelists at a cross-strait investment forum in Taipei said yesterday.

Abe Sung (宋天祥), a lawyer from Lee and Li Attorneys-At-Law (理律法律事務所), said the government was overly antagonistic toward foreign capital, especially from China, which is at odds with its effort to attract foreign investors.

“The [government’s] recent rejection of American International Group’s [AIG] plan to sell its stake in its Taiwan unit will prompt foreign investors to think twice about buying Taiwanese firms,” Sung told the annual forum organized by Taiwan Mergers and Acquisitions and Private Equity Council.

Sung, whose firm advises many foreign clients on business transactions, said there was no need for the government to keep Chinese capital at a distance because increasing globalization has made it impractical to identify the origin of capital.

“Chinese investors take part in many foreign funds and international acquisition activities today,” Sung said. “They don’t have as much difficulty as entering Taiwan.”

Regulators on Aug. 31 rejected AIG’s application to sell a 97.57 percent stake in local Nan Shan Life Insurance Co (南山人壽) on the grounds that the prospective buyer — China Strategic Holdings Ltd (中策集團) together with Primus Financial Holding Co (博智金融) — did not have sufficient funding for future capital needs or a long-term commitment to operate the insurer.

Sung said the government should also enhance its efficiency in reaching decisions on foreign investment proposals, noting that it took the government more than six months to hand down the rejection.

Vice Premier Sean Chen (陳冲) told the forum the government favors strategic investments that can help local companies improve their production and management techniques.

“Private equity funds intent on making profits from acquisition activities are not welcome,” Chen said.

William Chan (陳海軒), managing director of Abax Global Capital Co in Hong Kong, said many Chinese firms are interested in owning stake in Taiwanese firms, but are unable to do so because of legal barriers.

“Taiwan can help Chinese firms to upgrade with its superior technology and management know-how, while China provides great opportunity for territorial expansion,” Chan said.

Chan said Taiwanese firms are equipped with ample liquidity, but lack investment channels.

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