* Carlyle seeks other shareholders to join stake sale -
* Stake totals around 40 pct - source
* Didn't generate adequate returns in competitive sector
* Carlyle launching $3.5 bln Asia fund next month - source
By Denny Thomas and Stephen Aldred
HONG KONG, April 26 Private equity firm Carlyle
Group has hired J.P. Morgan to sell its around $330
million stake in Taiwan's Ta Chong Bank, sources said
on Thursday, in a deal that could lead to consolidation in
Taiwan's low-margin bank sector.
Washington, D.C.-based Carlyle may be working to convince
other shareholders at the bank to add their stakes to the sale
in order to offer a controlling stake to buyers, the sources
Media reports in Taiwan have said Fubon Financial
and Yuanta Financial are interested in buying
Public disclosures show Carlyle owns a 23.76 percent stake
in Ta Chong, but a source familiar with the matter previously
told Reuters that including options and other vehicles,
Carlyle's stake totals around 40 percent.
Carlyle bought a 35 percent stake in Ta Chong in 2007 for
NT$21.5 billion ($729 million), part of a wave of private equity
investments in Taiwan's banks.
But the island's competitive, fragmented banking market has
never produced the returns investors such as Carlyle had sought,
and the firm is now among a number of private equity firms
looking to exit their stakes.
Longreach has hired Morgan Stanley to sell its stake
in Entie Commercial Ltd, while TPG Capital in
December cut its stake in Taishin Financial to 6.55
percent from 14.82 percent, including selling 3.45 percent to
Cathay Financial, Taiwan's largest financial holding
firm, for $155 million.
Buyout firms such as TPG, Longreach and Carlyle hoped low
valuations, China's growth prospects and a local consolidation
wave would boost the investments they made in Taiwan.
But the return on assets from Taiwan's banks in 2011 was
0.53 percent, the lowest among banks in Asia excluding Japan,
according to Fitch Ratings in Taiwan.
They also operate with little in the way of overseas
operations to fuel growth.
While their banking investments might not make the returns
originally expected, Carlyle, Longreach and TPG are all raising
new funds for Asia.
Carlyle is planning a new Asia fund of around $3.5 billion,
according to a source familiar with the matter, and is expected
to launch the fundraising at a meeting with investors in Japan
As part of the planned stake sale, Carlyle is also tidying
up Ta Chong's capital structure and has asked banks to refinance
a loan of around NT$12.3 billion ($417 million), Thomson Reuters
publication Basis Point reported on Wednesday.
The refinancing will free up some of Carlyle's shares for
sale. The shares were pledged as collateral on the existing
loan, when Carlyle invested in Ta Chong in 2007.
The sources could not be named because the matter was
private. Carlyle and J.P. Morgan declined comment. A Ta Chong
Bank spokesman said he was not aware of the process.