CDIB to set up Taiwan's first energy holding company

Dec 04, 2003 Ι Industry In-Focus Ι Furniture Ι By Ben, CENS
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Taipei, Dec. 4, 2003 (CENS)--China Development Industrial Bank (CDIB) will raise funds to set up an energy holding company, the first of its kind in Taiwan.

CDIB said the proposed energy holding company will help boost its fund-raising ability and integrate resources for strategic investments. The prospective holding company will manage CDIB's current investments in 30-odd power generation firms companies, and set up a NT$7 billion (US$205.88 million at US$1:NT$34) energy fund in cooperation with other financial institutions.

Benny Hu, chairman of CDIB, said his bank has already collected NT$4 billion (US$117.64 million) in subscriptions to the NT$7 billion energy fund, which will be invested in the energy utilities of the Asia-Pacific region.

Hu said the energy fund has targeted a Japanese enterprise as its first investment object. Nevertheless, Hu didn't identify the target company or tell the amount of money to be funneled into the Japanese firm.

CDIB's move to set up the energy fund comes as a positive response to the government's decision to implement the 10 new major construction projects with a total budget of NT$500 billion (US$14.7 billion) within five years. The government urged local private sectors to join domestic major construction projects by raising public construction funds.

A CDIB executive said the energy fund will be mainly invested in domestic power plants. Currently CDIB has invested in over 30 domestic power plants, including Star Energy Corp. and Sun Bar Power Corp. He said CDIB would also transfer its stakes in these invested power plants to the energy holding company.

According to a research study conducted by the Morgan Stanley Dean Witter & Co., corporate mergers and acquisitions in Asia will focus on the telecommunications and energy sectors. With the deregulation of the domestic energy market, mergers and acquisitions among Taiwan's private-own power developers will naturally emerge in the next few years.

In addition to domestic power plants, CDIB has also invested NT$268 million (US$7.88 million) to acquire a 10% in the Thailand-based Eastern Power and Electric Co.
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