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National Development Fund decides to invest in solar alliance

2018/01/13 16:08:45

Taipei, Jan. 13 (CNA) The National Development Fund, under the Executive Yuan, has decided to fund a new solar energy alliance in Taiwan as part of the government's efforts to develop renewable energy.

After several meetings to study the feasibility of investing in a new company to be formed by the merger of three Taiwanese solar energy firms: Neo Solar Power Corp, Gintech Energy Corp. and Solartech Energy Corp, the fund has decided to go ahead and invest, its management committee said.

The new solar energy company is expected to be registered in the third quarter of this year after the injection of funding, Neo Solar Chairman Sam Hong (洪傳獻) said.

The fund, established in 1973 by the Cabinet, focuses on seed, start up, restructuring, merger and acquisition investments, to accelerate the pace of industrial development in Taiwan.

Currently, the fund is the largest single shareholder in Taiwan Semiconductor Manufacturing Co., the world's largest contract chipmaker.

To promote the upgrading of local industry, the government set up a special fund pool worth NT$100 billion (US$3.38 billion) through the National Development Fund and the new investment will come from that fund.

In October 2017, Neo Solar Power, Gintech Energy and Solartech Energy announced plans for a merger, the largest-ever deal of its kind in the Taiwan solar energy industry.

The merger will create a company with NT$21.1 billion in capital and is expected to strengthen Taiwan's competitiveness in the global market, the three partners said.

Under the agreement, one Gintech Energy share will be swapped for 1.39 Neo Solar shares, while one Solartech Energy will be exchanged for 1.17 Neo Solar shares. The company will be called "United Renewable Energy Co. (UREC)."

The decision to invest in UREC was made at a time when the government is promoting "5 plus 2" innovative industries, including the renewable energy business.

According to the fund's management committee, it will not take a larger stake in UREC than that owned by the company's largest single private shareholder.

Local media reports said after the formation of UREC, Delta Electronics Inc., a leading power management solution supplier in Taiwan, is expected to become the largest shareholder with a stake of about 6.5 percent stake in the new solar energy firm. In other words, the fund's shareholding in UREC is unlikely to top 6.5 percent, the reports said.

The fund's management committee said it will ask UREC to hold an investment fund raising event to boost capital, while the government fund will seek at least one seat on the new firm's board of directors.

Hung said UREC will focus on optimizing its solar cell production technology and plans to develop solar cell modules and solar power systems, efforts that could cost more than NT$5 billion.

Hung said the government fund and state-owned Yao Hua Glass Co. will finance this strategy.

Once UREC begins operations, Hung said, the new company expects to generate about NT$50 billion in sales in the first year and post NT$90-NT$100 billion in annual revenue within five years.

(By Chen Cheng-wei, Chung Jung-feng and Frances Huang)