As private equity firms get bigger and bigger, there is a need to expand into foreign markets. But this is never easy and requires lots of resources and political savvy. So, to help things along, why not buy a foreign bank?That's the thinking of Carlyle's latest deal: a $655.9 investment in Ta Chong Bank, which is based in Taiwan. Due to Taiwanese laws, Carlyle's equity stake is likely to be no more than 25%. As a result, Carlyle will bring along a variety of other financial backers.
The Taiwanese banking sector has been hit hard by a credit crunch. But it looks like things are improving. And it appears that the Taiwanese banking sector is ripe for consolidation. So, by investing in Ta Chong, Carlyle should be poised to be one of the consolidators.
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
