Mon, Dec 18, 2006 page11

• Taiwanese media firms appealing to foreign investors

  • By Jackie Lin / STAFF REPORTER
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  Over the past few years, private equity funds have marched into Taiwan in greater numbers to acquire media companies.

  In July, the Carlyle Group paid NT$47.6 billion (US$1.46 billion) to buy a majority stake in Eastern Multimedia Co (東森媒體科技), the nation's largest cable TV operator and 12 of its cable TV affiliates.

  This was after the Carlyle Group late last year sold its shares in Taiwan Broadband Communications (台灣寬頻) to the Sydney-based Macquarie Media Group, managed by Macquarie Bank, for A$1.19 billion (US$898 million).

  In October, MBK Partners Ltd, a private equity fund formed by former Carlyle Group executives, agreed to buy 60 percent of China Network Systems Co (中嘉網路), Taiwan's second-largest cable TV provider, for NT$30.9 billion.

  The trend is just picking up.

  For capital management firms, Asia's booming media industry, including interactive multimedia, digital media or cable TV operators, have become a sought-after target for investments, according to Douglas Abrams, managing director of Parallax Capital Management, which is based in Singapore.

  Abrams, whose focus is on investing in interactive digital media, said there are a few trends in the Asian market that are going to make this specific media space to grow more quickly than elsewhere.

  Asia's very young and highly productive age groups, as well as high broadband penetration rates and high mobile usages, are bound to make Asia move faster in digital media developments, he told the Taipei Times during an interview at the Asia Media Festival (AMF) held in Singapore last month.

  "Of course the economic growth, driven by China and some other fast growing economies, will create more demand for interactive digital media. So I think the market is moving very quickly and will continue to grow in the next five years," he said.

  Although he did not specifically mention Taiwan, he said his firm has an interest in investing in startup companies that can come up with innovative products, services or business models.

  During a keynote address at the AMF entitled “Play the Game — Funding from Private Equity,” Abrams gave tips on how one can win attention from private equity investors.

  He stressed that innovation would be the No. 1 requirement. Abilities to identify one's customers with effective marketing strategies mapped out to reach the potential customer base and possessing sustainable competitive

  advantages would be other important qualifications.

  With all these prepared, designing a good business model and financial plan to make returns within five years would be what a cash-strapped company needs, he said.

  For instance, Parallax Capital Management is looking for companies that can generate revenues of a minimum of US$15 million within three to five years, or have the potential to create at least ten-fold returns over three to five

  years, Abrams, said.

  The management firm has invested in Thinking Pictures Asia, an alternative outdoor advertising medium and digital advertising company, as well as a company that offers virtual financial services to consumers participating in

  multiplayer online games.

  “This has not been an area the venture capital traditionally focused on and that creates an opportunity for investors to get involved in this space now,”

  he said.

  Parallax Capital Management, which has approximately US$750 million under management, has investments in Korea, Hong Kong, Singapore and Indonesia, its Web site says.
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