GE, SAC exit Taiwan’s Cosmos Bank

According to a regulatory filing, Development Financial will pay NT$13.40 per share for all outstanding shares in the bank, a discount of 2.6% to the Monday closing price. SAC owns 57.09% of the business while GE holds 22.52%. China Development Industrial Bank, a subsidiary of the buying group, has 6.77%.

SAC and GE invested a combined $900 million in Cosmos in 2007, taking an 82% stake. This was part of a NT$42 billion recapitalization exercise required to bail out the bank, which was carrying significant bad debts. Taiwan's entire banking sector required support following a mid-2000s credit crisis and this led to investments by several private equity firms in mid-size lenders.

A degree of consolidation is expected due to a presently overcrowded domestic market - around 70 local and foreign players are active - and a desire among the banks to do more business overseas, although there are still political hurdles to expansion in mainland China.

During the 2006-2007 distress period, four foreign private equity investors took stakes in Taiwan institutions, in addition to the GE and SAC's buyout of Cosmos: TPG Capital took a 24% stake in Taishin Financial Holdings for $840 million; Temasek Holdings bought 15% of E.Sun Financial Holdings for $400 million; The Carlyle Group acquired 37% of Ta Chong Bank for $655 million; and The Longreach Group took a 51% interest in En Tie Commercial Bank for $696 million.

Cosmos represents the second exit, after TPG sold its remaining 7.8% holding in Taishin for around $181 million via the public market in July 2012.

Subsequent investments in the sector include Morgan Stanley Private Equity Asia's acquisition of minority stakes in E.Sun and Chinatrust Financial Holding in 2008 and 2009, respectively.

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• Topics
• Financials
• Exits
• Greater China
• Financial Services
• Exit
• Trade sale
• Taiwan (China)