Carlyle leads $656m investment in Taiwan’s Ta Chong bank

A consortium led by The Carlyle Group is buying a 36.6 percent stake in Ta Chong Bank, overturning the bank’s distaste for a private equity suitor.

The Carlyle Group is leading unidentified investors to acquire a 36.6 percent stake in Taiwan’s Ta Chong Bank for NT$21.5 billion ($656 million) via the purchase of common and preferred shares as well as convertible bonds.

The deal marks a reversal of  sentiment by the bank’s management. In December last year, the bank had indicated its interest to selling as much as a 25 percent stake to a foreign investor but stated its preference for investments from insurance companies or banks.

At that time, James Chiou, a spokesman for the bank, was quoted in the Taipei Times, a local daily, as saying “We do not welcome private equity fund players for any buyout deals.”

Choiu said in the latest statement: “We are delighted to have Carlyle as our financial partner who will increase our corporate governance by bringing in international best practices.”

The transaction will involve the purchase of 588,235,295 common shares and 235,294,118 preferred shares at NT$17 a share, representing a 41.7 percent premium to the bank’s share price prior to disclosure of the deal, and NT$7.5 billion worth of convertible bonds, according to the statement.

Carlyle is making the investment from its $1.8 billion pan-Asian (ex-Japan) buyout fund.

As the amount of shares to be acquired under the latest terms of the transaction exceeds that which had been approved at a 12 June shareholders’ meeting, Ta Chong will conduct an extraordinary general meeting to seek the approval for the issuance of additional shares and bonds.

Ta Chong has total assets of about NT$337 billion.

Carlyle’s investment in Taiwan’s financial sector trails Newbridge Capital (renamed TPG Capital), which acquired an 18 percent stake in Taishin last year, and The Longreach Group, which recently acquired a controlling stake in En Tie Bank.

MBK Partners, a North Asia focused private equity group founded by former Carlyle executives, was reportedly vying for a stake in Ta Chong Bank.