Cathay’s mutual fund business to form local PE unit in Taiwan

The move comes after local regulators removed restrictions on domestic asset managers participating in the asset class. 

Cathay Securities said it will submit an application to the Financial Supervisory Commission (FSC) about setting up a wholly-owned PE firm, with a view to launching the business by January 2018. The unit plans to raise NT$10 billion ($329 million) for its debut fund. The vehicle will make growth-stage investments in areas such as new energy, water resources, the green economy and agricultural technology.

Cathay Securities hopes the government will further relax regulations so that Taiwanese life insurers can back PE funds launched by mutual fund players, Jeff Chang, the firm’s chairman and head of the PE unit, told local media. At present, insurance companies' onshore investments are restricted to VC funds. 

The FSC announced last month that securities investment trusts and consulting firms (SITCs) could set up onshore private equity vehicles. To prevent conflicts of interest, managers should set up dedicated PE units, with revenues booked separately from the main mutual fund business. SITC-run funds cannot invest in listed companies, but they are encouraged to target private businesses in sectors such as infrastructure, utilities, and the environment.

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• Topics
• Greater China
• Fundraising
• Regulation
• Taiwan (China)
• Growth capital
• Infrastructure