PE veterans launch Taiwan PE fund

Former executives from Goldman Sachs, Temasek and The Blackstone Group will launch a Taiwan fund just as the island shows signs of opening to PE.

Three executives from private equity powerhouses have launched Zoyi Capital, a firm raising a $300 million fund to target Taiwanese companies with the potential to expand across Greater China, a source close to the firm told Private Equity International.

The firm will be led by Pei Pei Yu, Eric Chen and Andrew Kuo, all former private equity executives with prior experience in Taiwan.

Kuo, partner and chief executive of Zoyi, was a senior managing director at The Blackstone Group and remains a senior advisor to the firm, according to PEI's source.

Yu is a former partner at Goldman Sachs’ principal investment area, as well as the bank’s ex-head of investment banking in Shanghai and Taiwan. Chen was the president of Fullerton Financial Holdings, a wholly-owned unit of Singapore-based investor Temasek.

They are three very experienced individuals, they’ve all had long linkages with Taiwan – Andrew and Eric are Taiwanese – and have all had long careers in private equity and finance and spent the early part of their careers in Taiwan

Industry source

PEI’s source said the firm has differentiated itself in the Greater China market through the combined expertise of the partners. 

“They are three very experienced individuals, they’ve all had long linkages with Taiwan – Andrew and Eric are Taiwanese – and have all had long careers in private equity and finance and spent the early part of their careers in Taiwan.”

He added that the firm is operating in a market relatively untouched by private equity. “There are not many groups in Taiwan. But a lot of the LPs are unsure how sizeable the Taiwanese market is, so being able to invest in Taiwan companies that aim to establish or grow a presence in China is an interesting angle.”

Taiwan has been unfriendly toward private equity in the past. A recent AmCham Taiwan white paper on foreign investment said, “Taiwan embarrassingly ranks second to last among 17 Asian countries – behind Sri Lanka and ahead only of Pakistan – in attracting PE-fund investment.” 

The issue came to a head in 2011, when Kohlberg Kravis Roberts made a $1.6 billion bid for Taiwan’s passive component maker Yageo, which was blocked by regulators for unclear reasons. 

However, the country has recently shown signs of opening. Taiwan is expected to implement an amendment to its M&A policy that will set a more methodical and transparent approval process for private equity bids, Jonathan Hsin, partner in transaction advisory services at Ernst & Young in Taiwan, told PEI last month. 

The amendment has been dubbed the “Yageo Clause” and, among other reforms, will set the criteria for approving a private equity bid at 2/3 of shareholders’ approval. If regulators reject a bid outside that criteria, they must provide concrete explanations in line with M&A policy.

“[The amendment] will open the doors for private equity investment in Taiwan, but everyone is waiting for the first investor to step forward and go through the process, which will be a milestone,” Hsin said.