Four state asset managers to merge: finance minister

• By Crystal Hsu / Staff reporter

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Four state-owned asset managers are set to merge into a single fund house to strengthen their competitiveness, Minister of Finance Chuang Tsui-yun (莊翠雲) said yesterday, confirming a deal that had been the subject of market speculation.

First Securities Investment Trust Co (第一金投信) would be the surviving entity because of its larger asset base, with Mega International Investment Trust Co (兆豐投信), Taiwan Cooperative Securities Investment Trust Co (合作金庫投信) and Hua Nan Investment Trust Co (華南永昌投信) joining through a share swap, Chuang told a meeting of the legislature’s Finance Committee.

The four firms have agreed on the merger and reached a consensus with employees on the deal, Chuang said.

Minister of Finance Chuang Tsui-yun speaks at a meeting of the legislature’s Finance Committee in Taipei yesterday.

Photo: George Tsorng, Taipei Times

The process is proceeding in accordance with applicable laws and regulations, although approval from each company’s board is still needed, she said.

Local media have reported that the four firms plan to hold board meetings on Oct. 22.

The Ministry of Finance does not need to approve the timing of those meetings, Chuang added.

Under the proposed arrangement, First Securities would receive four board seats and two supervisory seats. Mega International would have one seat each on the board and supervisory body, while Taiwan Cooperative and Hua Nan would each receive one board seat.

The merger comes as Taiwan’s exchange-traded fund (ETF) market has grown rapidly into a major investment channel, intensifying competition among fund managers. State-owned firms have struggled to keep pace with private-sector rivals, prompting the government to seek greater scale through consolidation.

The combined fund house would manage 377 funds with total assets of NT$385 billion (US$12 billion), making it Taiwan’s 12th-largest asset manager, Chuang said, adding that the four firms would remain smaller players if they continued operating separately.

However, even after the merger, the new entity would remain far smaller than market leaders. For example, the Yuanta/P-shares Taiwan Top 50 ETF operated by Yuanta Securities Investment Trust Co (元大投信) has about NT$2.5 trillion in assets.

Lawmakers cautioned that combining the businesses would not automatically improve investment performance or profitability, particularly if the new fund house failed to attract investors with more competitive products.

Chuang described the consolidation as a first step toward improving the state-firms’ business performance.

The merged company would need better business strategies, stronger resources and wider distribution networks to turn its greater scale into tangible results, she said.

The merger has also raised concerns over employee arrangements, particularly among Hua Nan’s labor union members. The union agreed to an employee-placement plan on Oct. 5 after several rounds of negotiations, Chuang said.