05.17.2001
CDIB to sell 53% of investment trust company to HSBC for NT$3.3b

• HSBC Asset Management Co. is to acquire 53% of China Securities Investment Trust Co. (CIT, unlisted) from China Development and Industrial Bank (CDIB, 2804 'Kai Fa') for US$103m (NT$3.3b), equivalent to NT$83.4 per share. CDIB will make a profit of around NT$2.8b on the deal. The bank is obliged to accept offers for CIT due to regulatory complexities involving banks' shareholdings.

• HSBC is positive on Taiwan's long-term economic growth prospects and its mutual fund industry. It hopes to acquire the remaining CIT shares by the end of this year at the same price per share.

• At the beginning of the year, CDIB had set a selling price range on CIT of NT$70-80 per share. Hence, the higher selling price has surprised the market. CIT is the largest investment trust company in Taiwan, managing an asset portfolio of NT$94.7b.

• VB Primasia Investment Opinion: Although CDIB, which is transforming into a financial holding company, has hit on a profitable deal with the sale of CIT, it will lose an investment trust company from its financial holding company structure. This is sending mixed signals with respect to CDIB's business model. At present, we are NEUTRAL on CDIB.

WilliamFong@Primasia.com +886-[0]2-2547-8864