TAIEX soars to new high on Carlyle's bid for ASE

"Above all, ASE has come up with a solution for many other Taiwanese companies that have also been weighed down by the government's restrictions against their expanding further in China," said an analyst with a leading foreign securities house who asked not to be named.

Analysts said the government's tight grip on China-bound investments by local companies had a profound impact on the local stock market even before the Carlyle-ASE case surfaced.

This has led local companies to seek overseas listings, with Hong Kong the preferred choice, in order to enjoy much higher valuations than is possible at home, as well as to get around the restrictions on China-bound investments, they said.

Uni-President Enterprises Corp, the flagship of the nation's largest food and beverage conglomerate, has said it plans to list a wholly owned China-based unit in Asia, with Hong Kong seen as one of the possible locations for the listing.

"No final decision has been made on the timing and stock exchange for the planned listing," company spokeswoman Selina Wu (吳旭慧) said.

Meanwhile, the nation's financial stocks also soared for the fifth day yesterday, led by small-cap, independent banks on speculations for their possible acquisition by interested international private equity funds.

The financial sub-index rose 0.34 percent yesterday, with EnTie Bank (安泰銀行) and Chinese Bank (中華銀行) soaring by almost the 7-percent daily limit to NT$10.60 and NT$3.80 on the Taiwan Stock Exchange.

The two banking stocks gained after being listed by analysts among 30 most likely acquisition targets.

EnTie said in a filing to the Taiwan Stock Exchange yesterday that it is open to a partnership with foreign investors.

"A number of foreign investors have called on us before, but no deals have taken place thus far," EnTie vice president Rich Lee (李智) told the Taipei Times in a telephone interview yesterday.

EnTie would prefer an approach from a foreign bank, rather than a buyout fund, as such a partnership could help to sharpen its management know-how and international presence, Lee said.

Meanwhile, the Carlyle Group is reportedly also interested in acquiring Chinese Bank after taking control of its affiliate, Eastern Multimedia Co (東森媒體科技), in July.

However, the financial regulator is likely to take an increasingly guarded approach to approaches from international buyout funds.

The FSC held an informal meeting on the issue yesterday, but has not yet reached any conclusions, Susan Chang said.

The financial watchdog would closely review the suitability of buyout funds becoming major shareholder of local financial institutions, she said.

Takeovers of non-financial companies by private equity funds are subject to the approval of the Ministry of Economic Affairs' Investment Commission, she added.

In regulatory terms, it is almost impossible to block bids from buyout funds. Any new defensive measures would require inter-departmental consensus within the Cabinet, Susan Chang said.