MBK Bids for Taiwan’s Sunny Bank

TAIPEI (Reuters) – MBK Partners and two other private equity funds have submitted proposals to buy Taiwan's Sunny Bank, a source close to the situation said on Thursday, marking the latest foreign interest in a Taiwan bank as the crowded sector consolidates.

The source declined to name the other two bidders for the small Taiwan lender but said that Carlyle Group [CYL.UL], named as a bidder in a previous media report, was not one of them.

“All the private equity investors we've talked to say what they care about are the Taiwan and China markets, and the broader Asia market,” said the source, who asked not to be identified while the sales process was ongoing.

Sunny Bank plans to pick one foreign investor for a preferred right to buy a 51 percent stake and management control in the first round, said the source. Two more stages are ahead before a final buyer is decided.

If done, the deal could be worth about T$12.7 billion ($416 million) based on a price-to-book ratio of two times, against the average 1.3-1.4 times of the financial sector, according to analyst estimates.

Taiwan's banking industry — Asia's fourth-largest — has attracted major global banks, Carlyle, Newbridge Capital [NB.UL] and other private equity funds.

Together they have bought into about 10 local troubled or small lenders in the last two years, in part because they see banking stocks as undervalued compared with more high-profile Asian peers such as China. 

GREATER CHINA SPRINGBOARD
Foreign investors are also have rising hopes that they can use Taiwan banks or firms as a springboard to tap the Chinese market, since the administration of President-elect Ma Ying-jeou and his Kuomintang Party (KMT) favours closer business ties with China.

TPG Capital [TPG.UL] had said this week it hopes to use Taiwan as a base to buy into Chinese firms, in what could be a model for others ahead of expected relaxations in investment rules under the new president. [ID:nTP138841]

Sunny Bank has 96 branches on the island, more than that of any foreign banks, including HSBC (0005.HK: Quote, Profile, Research), Standard Chartered (STAN.L: Quote, Profile, Research), Citigroup (C.N: Quote, Profile, Research), ABN AMRO and Southeast Asia's biggest lender DBS Group (DBSM.SI: Quote, Profile, Research).

The bidding by MBK Partners would be the buyout firm's second attempt to buy into a Taiwan lender, after losing out to Carlyle for a stake of Ta Chong Bank (2847.TW: Quote, Profile, Research) last year.

“In the U.S. and Europe, the liquidity has dried up. But for Taiwan and Korea, if you want leverage, you can get leverage,” K.C. Kung, a co-founder and partner of MBK Partners, said at an industry event in Taipei this week.

Morgan Stanley (MS.N: Quote, Profile, Research) is advising Sunny Bank on the deal.

($1=T$30.82)

(Reporting by Faith Hung; Editing by Edmund Klamann and Lincoln Feast)