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Daiwa Securities forms alliance with Taiwan's Lin Yuan.

TAIPEI, July 11 Kyodo

Daiwa Securities Group Inc. and the Lin Yuan Group, one of Taiwan's largest conglomerates, on Tuesday announced a capital alliance under which Lin Yuan will take a 25% stake in the Japanese brokerage's Taiwanese securities unit.

The stake is worth NT$500 million (about US$16 million).

Under the deal, the Taiwanese unit of Daiwa Securities SB Capital Markets Co. (Daiwa Securities SBCM), Daiwa's wholesale arm, will issue NT$500 million worth of new shares to two Lin Yuan companies, Cathay Construction Co. and San-Ching Engineering Co., for a 19% stake and 6% stake, respectively.

Following the equity tie-up, which still needs approval from Taiwanese regulatory authorities, Daiwa's Taiwan unit, Daiwa Global Securities Co., will be renamed Daiwa SBCM-Cathay Securities Co. Ltd.

Speaking after a signing ceremony in Taipei, Cathay Construction Chairman Lee Chao-chi said the alliance with Daiwa will give Lin Yuan, whose flagship company is Cathay Life Insurance Co., a foothold in the island's lucrative securities industry.

"We have already an insurance company and a bank and a construction company, but no securities company. Daiwa has a very long experience and know-how in this area, so we hope to join forces with them," Lee said.

He said traditional industries such as construction must diversify their investments into high-tech and other high-growth areas.

Akira Kiyota, president of Daiwa Securities SBCM, said his company hopes to profit from Lin Yuan's customer base, which includes many institutional investors.

He said he is convinced that the tie-up with the Taiwanese conglomerate will help Daiwa Securities SBCM penetrate the local market more rapidly than going it alone.

Noting that Japan's securities business has been slack for the past few years, Kiyota said the foray into Taiwan was "a very important step."

Backed by sound economic growth, the local securities market has plenty of growth potential, he said. Arguing that the retail securities business on which the Taiwan unit has been concentrating "has its limits," Kiyota said expansion of its wholesale side is a must.

Daiwa Securities SBCM established Daiwa Global Securities as a wholly owned subsidiary in April 1999 with a capital of NT$1.5 billion.

The brokerage also has a branch of its Daiwa Institute of Research in Taipei as well as a local unit of its venture-capital investment arm NIF Ventures Co.
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Publication:Asian Political News
Geographic Code:9JAPA
Date:Jul 17, 2000
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