Taiwan's government plans to sell about 1.4 percent of Taiwan Semiconductor Manufacturing Co (TSMC,
The National Development Fund (開發基金) and the National Stabilization Fund (國安基金) will offer 48.6 million American depositary receipts, each representing five common shares, bankers involved in the sale said. TSMC executives also plan to sell shares and the total sale may be increased 15 percent if there is demand, they said.
TSMC shares doubled since October on optimism investments in advanced chips will boost profit. By selling ADRs, which are trading 45 percent more than the common shares, the government can take a bigger profit on shares they bought in Taiwan.
"The budget is showing them a shortfall they need to address," said Aaron Pong, who helps manage US$200 million at RBC Investment Management Ltd. "If I was them, I'd take some profit off the table."
Taiwan's 2002 budget, endorsed last week, will leave President Chen Shui-bian's (陳水扁) government with NT$80.7 billion (US$2.3 billion), less revenue than it wanted.
The National Development Fund in September canceled a sale of TSMC shares after the US terrorist attacks caused the US trade stock to fall more than a quarter in four days.
TSMC management will sell a "very small portion" of shares as part of the offer, said company spokesman Tzeng Jinnhaw (
Goldman Sachs Group Inc is managing the share sale, the bankers said. Merrill Lynch & Co is assisting with the offering.
"Their shares look expensive so from the management and government funds' points of view it's a timely sale," said Devan Kaloo, who helps manage about US$3 billion at Aberdeen Asset Management Ltd.
The National Stabilization Fund is expected to sell 26.8 million ADRs, the National Development Fund 21.8 million and management 2.4 million, the bankers said. Exercising a "greenshoe" option to increase the sale by 15 percent and bring the amount raised to about US$1 billion, based on the closing price for the ADRs on Friday.
Investor presentations start Jan. 28 after a period of marketing to test demand and final terms will be set Feb. 1, the bankers said.
Bank of America Corp, Credit Suisse First Boston, Deutsche Bank AG and J.P. Morgan Chase & Co are also involved in the sale, the bankers said.
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