Private equity funds’ investment in Taiwan last year reached a high of US$3.7 billion, up 105 percent from US$1.8 billion in 2019, as more funds invested in semiconductors and renewable energy amid low interest rates, the Taiwan Mergers and Acquisition and Private Equity Council (MAPECT, 台灣併購與私募股權協會) said on Wednesday.
Although most of the 21 deals that closed last year were conducted by venture capital funds and were comparatively smaller in terms of investment, some were large, iconic deals, MAPECT said in a report.
MagiCapital Group Ltd (東博資本) spent US$426 million to purchase all shares of On-Bright Electronics Inc (昂寶), a China-based chipset maker and Lite-On Technology Corp (光寶科技) affiliate, and US$138 million to acquire MediaTek Inc (聯發科) subsidiary Ili Technology Corp (奕力), a flat panel driver IC designer, the report said.
The target firms have both faced challenges in the past few years, with On-Bright posting slower revenue growth and lower gross margin due to market competition, and Ili Tech contending with limited room for growth due to intense competition, the report said.
MagiCapital is expected to support the firms and help them adjust strategies, it said.
MagiCapital, which focuses on Taiwan and China, has targeted the domestic semiconductor sector since 2019 and was one of the most active private equity funds in Taiwan last year, the report said.
The biggest private equity fund investment last year was a joint US$2.67 billion investment in Orsted A/S’ Greater Changhua 1 project by Cathay PE, a private equity fund of Cathay Securities Investment Trust Co (國泰投信), and institutional investor Caisse de depot et placement du Quebec, the report said.
Also in the renewable energy sector, AMP Capital Investors Ltd last year invested US$138 million in Swancor Renewable Energy Co (上緯新能源) to help build the Formosa II wind farm, and BlackRock Real Assets invested US$236 million in New Green Power Co (永鑫能源), a photovoltaic systems company, the report said.
“The nation’s green energy projects attracted more attention from private equity funds last year than in the past few years. This change could partially be attributed to the fact that these power projects would generate stable revenue for many years and investors want to take hold of long-term investment opportunities,” the report said.
In a low-interest rate environment with high volatility in stocks markets, investment projects that generate stable income were favored by many investors, the report said.
Besides the semiconductor and green energy sectors, telecom, biotech and food sectors were other investment targets of private equity funds last year, it said.
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