Taiwan’s strict FDI rules keep private equity out

Author: Brian Yap | Published: 22 Feb 2017

Taiwan has pulled out all the stops to kick-start a wave of Taiwan-led outbound M&A by forking out billions of dollars, but the domestic market remains semi-closed to foreign private equity (PE) firms.

The National Development Fund Management Committee, part of Taiwan’s parliament, decided last July to set up a NT100 billion ($3.25 billion) public-private fund to finance domestic companies’ acquisitions at home and abroad. The fund is reported to provide up to 20% of the total outbound investment value, with NT10 billion allocated to each approved transaction.

But counsel in Taiwan argue that, while the government has increased state funding for and eased regulatory restrictions on outbound acquisitions, a lack of exit alternatives and strict vetting processes imposed on foreign PE funds have been a major obstacle to inward foreign direct investment (FDI).     

"All those examples have given an impression to...