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Capital Markets

Beijing fears threaten Taiwan insurance takeover

The proposed sale of Taiwan’s second-largest life insurer to two firms with reported links to the mainland is causing consternation in Taipei. Is this cross-strait paranoia or are locals right to be worried? Elliot Wilson investigates.

TAKE A JITTERY island government fearful of influence by a neighbouring Big Brother state. Then add a dash of spice in the form of a tiny Hong Kong-listed battery-maker with delusions of grandeur, a mob of angry protesters, a former life insurance division of America’s AIG, and a private equity firm with nebulous financial ties to – the island state fears – Beijing. End result? A tale fit for a spy novel, or perhaps a blockbuster thriller.

At the centre of this unfolding story is Nan Shan Life Insurance, Taiwan’s second-largest life insurer, with $46 billion in assets. Founded in 1963, Nan Shan is being sold virtually wholesale by AIG to the US firm’s preferred bidders: a partnership that brings together the battery-maker, China Strategic Holding (CSH), and a Hong Kong-based private equity firm, Primus Financial Holdings. In November 2009 the two companies agreed to buy 97.57% of Nan Shan for $2.2 billion.

Primus Financial itself has both money – more than $1.2 billion in committed capital – and experience: its co-chairman and co-chief executive, Robert Morse, was until April 2009 head of Citi’s Asia-Pacific institutional clients group. A fund set up at that time primarily to invest in undervalued financial services assets, Primus Financial is at first and second glance a credible investor.

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