private equity guide 2016 · oil and gas prices on private equity in latin america everstone...

www.iflr.com IFLR/July/August 2016 73

Private Equity Guide 2016

Empea p74Private equity’s energy boostJeff Schlapinski, manager of research at the industry

association, assesses the impact of regulatory reforms and

oil and gas prices on private equity in Latin America

Everstone Capital p76India risingBhavna Thakur of Everstone Capital Advisors in

Mumbai discusses the impact of new regulatory

regimes and increased defaults on private equity

activity in India and the wider region

Clifford Chance p78Europe’s strangleholdJonny Myers and Simon Crown, partners at

Clifford Chance in London, assess the impact

of banking reforms and Brexit on private equity

in Europe

China p80Investment successEdward Li and David Xu of Zhong Lun set out

the legal issues for international fund

managers in China’s growing private

equity sector

Egypt p84The rules of engagementOmar Bassiouny of Matouk Bassiouny sets

out what you need to know about Egypt’s

capital markets

Taiwan p86A growth agendaSophia Yeh and Ken-Ying Tseng of Lee and Li explain why

investing in start-ups is key to kick-starting Taiwan’s

economy

CONTENTS PRIVATE EQUITY SPECIAL FOCUS

74 IFLR/July/August 2016 www.iflr.com

PRIVATE EQUITY SPECIAL FOCUS EMPEA

L atin America has become a growing magnet for international privateequity firms in recent years. Mexico and Brazil, which have been lead-ing the region’s private equity growth, continue to thrive in terms of

deal flow driven by regulatory reforms in the energy space amid a depressedcommodity pricing environment.

But challenges arising from complex labour and administrative rules inmarkets such as Brazil continue to affect new global private equity investorscoming into the region. Here, Jeff Schlapinski, manager of research atEMPEA, assesses the sector.

With more debt restructurings taking place in the oil and gas sectorsin Latin America, how are you seeing that affecting volumes ofprivate equity fundraising? Mexico and Brazil still account for the majority of the fundraising and dealflow in Latin America, and to a lesser extent, there is some activity in Columbiaand Peru, as well as Chile and Argentina. In 2014, there was over $10 billionraised for Latin America-focused private investment funds raised - a record.

Particularly in oil and gas, companies are facing a much tougher envi-ronment than they have for quite a while. In terms of deals getting done,to some extent, it’s still a bit early for opportunities in the distressed or spe-cial situations space due in part to political uncertainty in places like Brazil.I think some firms are taking a wait-and-see approach to see what happensto big state-backed companies like Petrobras and what their restructuringor divestment plans might be. Petrobras is reported to be considering thesale of an 81% stake in its natural gas subsidiary to a consortium led byBrookfield Asset Management for nearly $6 billion.

So while there has been some activity in the distressed space, it’s stillearly days. There are some distressed debt specialists, rather than just thebiggest global buyout players, focused on the region, but to the extent thata lot of corporate debt that has been issued in Latin America - emergingmarkets corporate debt grew from $4 trillion in 2004 to over $18 trillionin2014, according to the IMF - it’s more on the tradable side, and a lot ofthe debt raised has been issued by state-owned entities.

I think a lot of the big private equity firms are more interested in fun-damentally-sound companies that are just going through a difficult eco-nomic environment and facing tight financing conditions, which enablesthe private equity shops to close deals they weren’t able to do earlier.

Jeff Schlapinski, manager of research at EMPEA in Washington DC, assesses the impact ofregulatory reforms and oil and gas prices on private equity in Latin America

“While there has been someactivity in the distressedspace, it’s still early days

How has Mexico’s energy reform under President Enrique PenaNieto been driving an influx of private equity investment into thecountry’s power sector in the past two years?Perhaps as a result of the energy reforms signed into law by Mexico’sPresident Pena Nieto in 2014, we have seen more deals in the oil and gassector, such as the $525 million investment in Sierra Oil & Gas byRiverstone Holdings, BlackRock and EnCap Investments—but anothersector that is really interesting is power. In Mexico and in Latin Americamore generally, there is a huge need for additional private investment in allparts of the energy sector, especially given where the price of oil is right nowand the resulting stress faced by some of the large state-backed energygroups. There hasn’t been perhaps quite as much on the deal side in oil andgas because of this difficult pricing environment and some of the uncertaintyabout which direction the global market is headed in. But in power therehas been a number of large PE firms such as Actis and Macquarie or othersin Mexico doing deals in renewables especially.

In January, Mexico Infrastructure Partners announced that it hadraised $42.8m for energy investment by issuing a structured equitysecurity. Have you seen a rise in this kind of capital raising in LatinAmerica?EMPEA recently published a report on private equity in Mexico, and oneof the things we explored is the rise of local pension fund participation inthe asset class. Because of some of the regulatory evolution that hashappened in Mexico over the last five years, there has been a huge uptakein capital commitments from local Mexican pension funds to alternativeassets like private equity and real estate.

Private equity, infrastructure and private credit firms raised over $2 bil-lion for Mexico in both 2014 and 2015, both of which are the highestannual totals we have on record. Mexico, compared with other emergingmarkets, is the vanguard when it comes to local pension funds and that’sbeen a huge boost to local fund managers.

However, it’s not just local firms. You also have large global managerssuch as KKR that are coming in to raise capital from the pension fundsusing a local vehicle, the CKD. When it comes to other markets in region,such as Chile and Colombia, there hasn’t been as much recent momentum,but then many of these were relatively more advanced than other emergingmarkets that we look at.

There are several players active in Latin America in the distressed bondor debt space, but there’s still a relatively limited number of fund managersin our space specialising in private credit or in publicly-traded distressedbonds. Many of those firms will be more on the hedge fund side, but thereare several firms, especially in Mexico, like Credit Suisse that were activelyraising dedicated private credit funds last year. Overall, 19 of the Mexicanlocal funds, or Certificados de Capital de Desarrollo (CKDs), were raisedin 2015, including PE, infrastructure and private credit, which was arecord. But it’s relatively more limited in terms of private equity funds orprivate credit funds and more of it is hedge funds that are active in the dis-tressed space.

Besides the energy reform in Mexico, how have other regulatorychanges in other key Latin American markets facilitated the entryof private equity firms investing in these jurisdictions?On a relative basis, the industry in Mexico has grown quickly in recent years,and I think there are several reasons for that. One is the regulatorydevelopment that I mentioned earlier, with a huge pickup in local capitalfundraising. Support for private investment among Mexican regulators hasbeen strong in recent years and they are already looking at a furtherevolution in rules for local funds that prove more accommodative for foreigninvestors. Second is the fact that the Mexican economy is relatively moretied to the US than to China or other emerging markets, and the outlookfor the US is not spectacular, but pretty solid.

So, to that extent, Mexico hasn’t seen the same magnitude volatility thatyou would see in Brazil or Columbia, where there is a much more pro-nounced commodity slump some adverse shocks because of what’s goingon globally, especially in China.

Looking forward, the power sector definitely will be an investment tar-get for private equity and infrastructure investment firms in Latin America;there is certainly a need for more private capital in the space in order tobuild new assets and also to modernise the sector.

In terms of regulatory hurdles facing investors in the region, such as inthe case of Brazil, some of the labour and administrative rules areheadaches for the fund managers that we work with, but with a new inter-im government in place in the country, there could be more progress in theyears to come.


EMPEA

About the contributorJeff Schlapinski is the manager of research at EMPEA, the globalindustry association for private capital in emerging markets. EMPEA isan independent non-profit organisation with over 300 member firms,comprising institutional investors, fund managers and industryadvisors, who together manage more than $1 trillion of assets and haveoffices in more than 100 countries across the globe.

Schlapinski leads EMPEA’s efforts to produce authoritative data,analysis and in-depth reporting on emerging markets privateinvestment activity. He interacts regularly with EMPEA Members, themedia and other industry professionals in support of EMPEA’s missionof fostering a more informed industry to realise investment returns andsustainable growth in emerging markets. He graduated from theEdmund A. Walsh School of Foreign Service (SFS) at GeorgetownUniversity in 2010 with a B.S. in International Economics.

Jeff SchlapinskiManager of Research at EMPEA inWashington DCT: +1 202 333 8171E: [email protected]


PRIVATE EQUITY SPECIAL FOCUS EVERSTONE CAPITAL

H istorically, Asia Pacific private equity deals were minority deals infamily-owned businesses. The private equity model in businessesaimed to realise return growth through revenue and margin

expansion, and then exit largely through IPOs rather than sale to strategicpartners. However, this trend is showing signs of change with a shift tomore buyout deals. The total value of buyout transactions increased to $53billion in 2015, registering a growth of over 100% and dwarfing the $22billion average over the previous four years.

Trends of the previous decade show that most of the debt for Indiancorporates has been largely raised from commercial banks. Fresh fundsraised from government banks and private Indian banks are becomingmore difficult due to the stress nature of the Indian banking system. As ittakes over 4.3 years to resolve bankruptcy and on average banks recoveraround 30% of the loan amount, foreign commercial banks generally donot participate in lending to corporate individuals.

But according to the Asia Pacific Private Equity Report 2016 publishedby Bain & Company, a substantial rise in exit transactions, as facilitated byan uplift in India’s public equity market, saw the country rake in $12 bil-lion in exit value in 2015. The high number of exits in India and China inturn provided an incentive for Asia-focused general partners (GPs) todeploy their ample dry powder into fund-raising activity. The report putsthe amount of unspent capital held by GPs in Asia-Pacific in 2015 at atotal of $128 billion, or about two years’ worth of investment, contribut-ing to a 44% appreciation of deal value to a record high of $125 billion.

While Asia is expected to continue to grow economically, with Chinahaving recorded a 6.7% GDP growth this year, the staggering increase incorporate restructurings and reduced implicit government support haveproved to be both opportunities and barriers to private equity players inthe region. Here Bhavna Thakur explains the potential implications of thenew bankruptcy regime in India and an ever-growing accumulation ofnon-performing loans for private equity investors in Asia.

How has the maturation of the private equity sector in the AsiaPacific helped facilitate the recent increase in buyout deals out ofand within the region?Over the years, funds, through their minority investments, have developeda good understanding of different markets and sectors across Asia. Giventhis deeper understanding, they now prefer the own-and-operate model thatgives them more control over outcomes in terms of hiring operating teams,rather than depend solely on the existing promoters.

India risingBhavna Thakur of Everstone Capital Advisors in Mumbai discusses the impact of new regulatory regimes and increased defaults on private equity activity in India and the wider region

“The key benefits for funds toundertake buyouts are tocontrol the exit path, process,and timing

Over the past decade, growth capital allowed businesses to reach a cer-tain maturity and also enabled owners to develop faith in the ability offunds to add value to current operations. Many owners now acknowledgethat transformational changes are required to scale further, and they cedecontrol to funds as they appreciate their expertise and capabilities. In addi-tion, the other factors where owners consider majority sale transactions arewhen they face succession issues and when corporates are hiving off non-core businesses to release cash for deleveraging balance sheets.

What are some of the drivers facilitating buyouts of distressedassets in India?Another enabling factor for buyouts is the availability of capital pools tofund such transactions. Over the past two years, $108 billion of capital hasbeen raised by PE funds for Asian investments. Additionally, LPs andsovereign wealth funds are demonstrating increasing wiliness to partner withGPs to fund larger transactions.

The key benefits for funds to undertake buyouts are to control the exitpath, process, and timing: this traditionally has been a challenge in the caseof minority investments in Asian markets. The aim to have greater controlover exit outcomes has increased the preference for buyouts. This inclina-tion is reflected in a recent survey of GPs by Bain Consulting which indi-cates that the focus on buyout deals in the region will continue, with over75% of the GPs indicating that buyouts would make up over 80% of theirportfolio in the next two-three years. They also expressed a strong desire tonegotiate a path to control provisions in current minority growth deals.

We believe these are interesting times for the Asian PE funds, as theAsian PE model syncs with the well-established fund models in developedcountries

How may the revision of India’s bankruptcy regulations, coupledwith the central bank’s authorisation to allow lenders to swapdebt for equity, help clean up distressed assets in the financialsystem?The new bankruptcy law will have several long-term benefits and willaddress systemic challenges in the country’s current liquidation procedures.Today, bankruptcy proceedings in India are governed by multiple laws—the Companies Act, the Securitisation and Reconstruction of FinancialAssets and Enforcement of Security Interest Act (SARFAESI Act), and theSick Industrial Companies Act among others. The entire process of windingup is also very long and drawn out.

The new bankruptcy law streamlines and consolidates all these laws tomake the process simpler. The government is working on several areas toeffectively implement the new bankruptcy law, which include amend-ments to the SARFAESI Act in order to strengthen Asset ReconstructionCompanies (ARCs). Such amendments will allow sponsors of ARCs tohold 100% stake in these firms, permit non-institutional investors toinvest in securitisation receipts, and allow for the overhaul of the debtrecovery tribunals. The government also plans to move the entire processonline and increase staffing to ensure no legislative delays.

What are the benefits of the new bankruptcy law?In terms of benefits, the new bankruptcy law will put in place a speedymechanism for debt restructuring and allow banks to rapidly auction assetsto interested parties. The auctions of restructured assets with limited or noliabilities at reasonable valuations will attract several investors, includingspecial situation funds. Besides, a strong bankruptcy law will enable thedevelopment of a corporate bond market in India, which currently is around$800 billion. This is still miniscule as compared to the US corporate bondmarket, which is around $40 trillion.

And are there any challenges presented by the new bankruptcyregime?While these steps of the government are in the right direction, the keyimpediment to speedy implementation is current lacunae in the training ofinsolvency professionals who will play a key role when the bankruptcy codeis triggered. It would take some time to train such professionals and put inplace appropriate rules and regulations governing such professionals. Thesemeasures would be important for the successful implementation of thebankruptcy law.


EVERSTONE CAPITAL

“We believe these areinteresting times for the AsianPE funds

About the contributorBhavna Thakur is head of capital markets at Everstone, an India andSoutheast Asia-focused private equity and real estate investor.Headquartered in Singapore, Everstone has 165 employees across fiveoffices (Singapore, Mumbai, Delhi, Bengaluru, and Mauritius) andmanages over $3 billion.

Before joining Everstone in 2015, Thakur had over 17 years ofcorporate finance, investment banking, M&A, and capital marketsexperience. Previously she worked with Citigroup, Morgan Stanley inMumbai, and Paul Weiss Wharton & Garrison, and Davis Polk andWardwell in London and New York, respectively.

Thakur holds a BA LLB (Honors) from National Law School of India,and a Masters in Law from Columbia University.

Bhavna Thakur Managing director of capital marketsEverstone Capital Advisors MumbaiT: +91 22 40436045E: [email protected]


PRIVATE EQUITY SPECIAL FOCUS CLIFFORD CHANCE

S ince Britain voted to leave the European Union on June 24, UK-based private equity (PE) groups have been calling for the govern-ment to ensure that access to markets within the region remains

intact post-Brexit.

While many have argued that their ability to conduct fundraising for buy-outs could deteriorate, UK-based PE managers haven’t ceased to hunt for newequity to invest, with London-based Cinven having raised €7 billion ($7.8 bil-lion) from international investors.

Despite market uncertainty generated by the EU referendum, a researchstudy by the Centre for Management Buyout Research at Imperial CollegeLondon points to an increase in deal volumes valued at less than €50m in thefirst two quarters of 2016.

The Global Private Equity Report 2016 by Bain & Company, on the otherhand, points to Europe’s resilience amid currency fluctuations and debt accu-mulation within the eurozone. While buyout multiples plummeted to a frac-tion below 10 times Ebitda (Earnings before Interest, Taxes, Depreciation andAmortisation), private equity managers succeeded in pulling in $143 billion inasset sales. But strategic sales, dampened by economic uncertainty arising fromevents such as Britain’s potential exit from the EU, fell 40% to $68 billion in2015 from a year earlier.

The uncertain profit outlook, however, has fueled the strength of sponsor-to-sponsor deals in Europe, with general partners (GPs) succeeding in sellingportfolio holdings to other PE investors equipped with sufficient dry capital.The report shows that Europe raked in a record $44.7 billion from 152 spon-sor-to-sponsor exit deals, surpassing $28 billion the previous year.

While the global public equity markets have been stagnant in the past year,GPs in Europe have managed to help 65 portfolio companies raise an initialpublic offering totaling more than $30 billion. Advent International and BainCapital’s offer of shares of their $7.4 billion stake in UK-based payments pro-cessing firm, Worldpay was named the biggest European PE-backed IPO in2015 by Bain & Company.

While the bullish figures suggest that there is a lot of potential for PEgrowth in Europe, a host of issues ranging from the UK’s exit from the EU andgrowing retrenchment of banks under strict Basel III capital requirements havecreated a lot of uncertainty in the region. Here, Jonny Myers and Simon

Europe’s strangleholdJonny Myers and Simon Crown, partners at Clifford Chance in London, assess the impact ofbanking reforms and Brexit on private equity in Europe

“Asset managers will be considering Brexit risk whenconsidering the acquisition of regulated UK firms as fund assets


CLIFFORD CHANCE

Crown assess the impact of these political and economic shifts on investmentdecisions of private equity players.

How has the imposition of stricter capital adequacy standards oncommercial banks under Basel III regulations pushed more mid-market European firms to seek direct loans from private equity firms? The Basel Accords have existed for several years and are designed to improveregulation, capitalisation, supervision and risk management within the bankingsector. As with earlier Basel measures, Basel III provides for different exposuresheld by banks to incur different capital costs. This, and other developments, hasled some banks to reduce the amount of lending in certain sectors.

Recently, we have seen a significant increase in direct lending by fundswhich has been driven by the expansion in products, assets and capital of largerprivate equity houses. There has been an increase in indirect lending since2007. However, banks remain active in leveraged financing and the debt mar-ket, despite increases in their capital requirements. The activity levels of nation-al banks depends on both the market sector and the region. In particular, thereis a greater presence of national banks in the mid-market where they have theadvantage of being able to utilise their local relationships and have the abilityto fund and extend loans to industries. We have also seen non-bank lendersteaming up with banks to take advantage of the banks’ credit risk analysis andcontact book.

How do you assess the impact of the UK’s exit from the EU oninternational private equity investors’ decision to engage in deals inEurope?Brexit is likely to impact UK financial services firms that use passports to provideservices into EU countries or to market funds (and may also affect continentalfirms using passporting rights to service UK clients). Asset managers will be

considering Brexit risk when holding or considering the acquisition of regulatedUK firms as fund assets. In addition, asset managers will be looking at theirlicences, their marketing rights and the licences of their service providers, toassess the impact of Brexit. However, it is likely to be at least a couple of yearsuntil the UK leaves the EU.

How have the new marketing rules under the Alternative InvestmentFund Managers Directive (AIFMD) come to impact private equityactivity in Europe?Prior to AIFMD, where the fund was a non-EU vehicle, the sponsor had tocomply with private placement rules in each EU jurisdiction into which thefund was marketed. Following AIFMD, this position is essentially the same,where the manager and fund are not in the EU.

Under the marketing rules a UK or EU manager only has the ability to raisefunds without complying with national private placement rules where themanager and fund are established in the EU. While some private equity houseshave a UK or EU manager, in the private equity sector it is very rare to haveboth an EU manager and for the fund to be established in the EU. So far, therehave not been any examples of a non-EU based fund structure.

“UK-based PE managershaven’t ceased to hunt for

new equity to invest

About the contributorJonny Myers specialises in domestic and cross-border public and privateM&A, with a particular focus on private equity transactions. Myers hasadvised private equity houses and corporate clients on a wide range ofmatters, including leveraged buyouts, acquisitions and disposals,takeovers, mergers, joint ventures, IPOs, cash confirmations,restructurings and refinancings. Myers also has particular experience inthe media and consumer goods & retail sectors.

Jonny MyersPartner, Clifford ChanceT: +442070064455E: [email protected]

About the contributorSimon Crown specialises in financial regulation, with particular focus onfunds and asset management and M&A and reorganisations involvingfinancial institutions. He also has expertise in the areas of regulatorycapital, client assets, transaction services (such as the regulation ofpayments) and European directives relating to financial services.

Simon CrownPartner, Clifford ChanceT: +442070062944E: [email protected]


PRIVATE EQUITY SPECIAL FOCUS CHINA

C hina’s private equity sector has a relatively short history, dating backto the 1990s. While it was dominated by international funds in itsfirst decade, funds domiciled in China and denominated in ren-

minbi (RMB funds) have played an increasingly prominent role in recentyears. In fact, many international funds have formed their own RMB fundsto build up their onshore platform and access the local limited partner (LP)base.

Structural issues for inbound investmentsUnder the Chinese regulatory regime, international private equity funds, likeforeign investors, have several disadvantages when investing in onshore Chinesecompanies, as compared with Chinese domestic investors. These disadvantagesare:

• foreign investment is restricted or prohibited in some sectors;• any foreign investment will require the approval of the Ministry of

Commerce (MOC) or its competent local office;• investment proceeds must be converted into RMB in accordance with the

rules of the State Administration of Foreign Exchange (SAFE), China’sforeign exchange regulator.

The first issue renders some investments off limits for international funds.In addition, the second and third issues substantially increase the time and, tosome extent, uncertainty in deal execution, often making international fundsless attractive to investment targets than their domestic counterparts. Inrecent years, Chinese regulators at both the national and provincial levels havetried to mitigate these issues and to attract international fund managers to setup onshore RMB funds.

In particular, regulatory developments in 2009 and 2010 made it possibleto form limited partnerships engaged mainly in equity investment that haveforeign or foreign-invested general partners (GPs) as well as foreign or foreign-invested LPs. Moreover, forming a foreign-invested limited partnership wouldonly require registration with the relevant provincial office of the StateAdministration of Industry and Commerce (SAIC). No MOC approval isrequired. These limited partnerships also enjoy tax transparency in that onlytheir partners, and not the limited partnership itself, are taxed. Some local taxauthorities (for example, Shanghai, Beijing, Tianjin and Chongqing) haveadopted further favourable tax treatment for RMB funds.

Partly as a result of these regulatory developments, the limited partnershiphas now become probably the most common structure for international funds

Investment successEdward Li and David Xu of Zhong Lun set out the legal issues for international fund managers in China’s growing private equity sector

“Regulatory changes havemade it easier for international fund managers toset up onshore funds as wellas to participate in outboundinvestment by PRC companies


CHINA

in forming RMB funds, as in most other jurisdictions. The following chartshows a typical structure for such a fund:

In this structure, an onshore entity serves as the GP to the RMB fund andprovides a small capital contribution in RMB to the fund. An alternativestructure is to have an offshore entity serve as the GP and provide the capitalcontribution in foreign currency. The roles of GP, management company andcarry vehicle are played by separate entities to segregate risks, as in most otherjurisdictions. In addition to tax transparency, the limited partnership offersflexibility in management structure, funding arrangement and operations.

Several points are worth making with respect to this structure (see above).

(i) GP and fund management companyInternational funds can set up wholly-owned subsidiaries in China (each, a so-called wholly foreign-owned enterprise, or WFOE) to be the GP and/or fundmanagement company of a RMB fund. Shanghai, Tianjin, Beijing andChongqing have promulgated rules to attract international funds to set upforeign-owned fund management companies.

(ii) Foreign investment limitationThe PRC Foreign Investment Industrial Guidance Catalogue restricts or prohibitsforeign investments in certain sectors, while permitting or encouraging foreigninvestments in other sectors. RMB funds with foreign LPs are subject to theserules. There was once some market hope, partly aroused as a result of languagein some locally-promulgated rules, that a RMB fund with 100% Chinesedomestic LPs and only a minimal investment by its foreign-invested GP maybe regarded as a domestic investor and not subject to the rules on foreigninvestment limitation. Unfortunately this hope was dashed by a later regulatorypronouncement. As a result, a RMB fund cannot be used to bypass therestriction or prohibition on foreign investment in the relevant sectors.

(iii) Portfolio investmentOne of the main disadvantages for international funds in China is the MOCapproval required for making each portfolio investment. However, investmentsby foreign-sponsored RMB funds in permitted or encouraged sectors wouldnot need the time-consuming MOC approval; only SAIC filing is required.This is a significant improvement over an international fund.

(iv) Currency conversionInternational funds investing in China previously needed to convert theirinvestments into RMB on a project-by-project basis, which is subject to thecumbersome SAFE approval process. Under the so-called Qualified Foreign

Limited Partner (QFLP) pilot programmes adopted by cities like Shanghai,Beijing and Tianjin, a qualifying RMB fund can convert the capitalcontribution of its foreign-invested GP all at once, subject to a cap as apercentage of the total fund size. In addition, some foreign-sponsored RMBfunds have obtained special quota to convert foreign currency contributionsby their LPs that meet the QFLP standards into RMB in advance. With theadoption of revised SAFE rules in the middle of 2015, RMB funds can nowconvert foreign currency capital contributions by their partners into RMB inadvance of investment and deposit these funds into dedicated accounts at theircustodian banks. Payments out of these accounts will be subject to examinationby the custodian banks (but not the SAFE) as to the purpose of payments.

One reason for the recent rise of RMB funds is that China’s two domesticsecurities exchanges in Shanghai and Shenzhen have become an increasinglyattractive exit route for investors. This has eliminated an advantage previouslyenjoyed by international funds when overseas listing presented the most real-istic or desirable exit. Foreign-invested companies, as well as domestic com-panies with investments from foreign-sponsored RMB funds, can now applyto list on a domestic securities exchange if they meet the listing qualifications.Investors can dispose of their shares subsequent to the required lock-up peri-od, and foreign investors can repatriate their sales proceeds offshore after pay-ment of applicable tax.

The domestic exchanges offer the additional advantage of a higher valua-tion than more mature markets. A number of China-based companies alreadylisted overseas have indeed sought to privatise and delist from overseas securi-ties exchanges and return to list in China to take advantage of the significantvaluation difference. However, listing on the domestic exchanges still requiresa lengthy and somewhat uncertain regulatory approval process. In addition,the one-year lock-up period for any pre-listing shareholder (three years for anycontrolling shareholder) is longer than many international bourses.

Structural issues for outbound investmentsWith the development of the Chinese economy, an increasing number ofChinese companies and individuals have started to seek diversified assetmanagement opportunities worldwide. This can be a significant source of fundsfor international fund managers. Previously Chinese investors tended to investmostly in the energy and mining sectors worldwide. Recently, Chineseinvestors’ outbound investments are covering a wider range of industries andbusinesses. These include equity investment funds and secondary marketinvestment funds established outside of China, particularly funds andinvestment vehicles managed and operated by professional teams.

offshoreonshore

International PE Firm

Offshore managementcompany

Onshore GP company

Project A Project B Project C

LPsLP

LP

GP

GPManagement

service

Management carry

Investors

RMB Fund(Limited Partnership)

Carry vehicle(Limited Partnership)


CHINA

Outbound regulatory proceduresChinese companies must go through the regulatory approval and filingprocedures before making outbound investments. Firstly, any outboundinvestment must be approved by the local MOC. Then, the outbound investorshould file with the local SAFE to complete the foreign exchange conversionbefore wiring funds outside of China. Meanwhile, a filing with the localNational Development and Reform Commission office should be made, butthis is not usually a pre-condition for the foreign exchange conversion.

These procedures used to be lengthy and uncertain. After the recent reformin the approval and filing procedures, despite the existing hierarchy and influ-ence of policy over the market, in most cases outbound investment procedurehas become much more manageable. It takes approximately three to fourweeks, although some geographic variation exists. In certain locations, forexample the Free Trade Zones in Shanghai and Shenzhen, it may take a shortertime.

Investment structureAn increasing number of Chinese companies are making overseas investments,for strategic as well as financial purposes. Sometimes the deal sourcing and/ormanagement of Chinese investors’ investments are outsourced to professionalprivate equity or venture capital firms. In some cases, Chinese investors form aconsortium or fund for the investment. This consortium will normally bestructured as an equity investment fund. If multiple Chinese investors areinvesting together with foreign investors offshore, they will normally first forma RMB fund in China to simplify the outbound investment approval procedure.This RMB fund should be subject to careful legal structuring. This is similarto the master feeder fund structure: the Chinese RMB fund entity acts as afeeder fund, and the offshore vehicle functions as the master fund entity.

From time to time, Chinese investors will also conduct fund-raising inChina before they further invest into offshore fund structures. This couldinvolve the issuance of trust units and asset management financial planningunits. Seamless cooperation and communication between fund professionalsand counsel is key to establish and implement a successful structure.

To save time and facilitate regulatory approval, it is usually advisable forChinese investors or a Chinese feeder fund to establish a foreign offshore spe-cial purpose vehicle (SPV) before further investing in the overseas target. Suchan intermediary SPV will also help when exiting the investment. Althoughthe outbound investment approval procedure has been simplified, there is stillsignificant variation and uncertainty in the procedure to convert RMB intoforeign currency depending on the time and location. It is worth checkingwith the relevant local foreign exchange administration before determiningthe structure of a particular deal.

Fintech’s outbound investmentsAs China has opened up a limited room for Chinese citizens to convert RMBinto foreign currency, more and more Chinese individuals are starting to usetheir available foreign exchange conversion quota to directly invest into offshoreasset management funds. A recent trend has emerged whereby Chinesefinancial technology (fintech) start-up companies operate outbound investmentand investment funds. Some of the leading Chinese companies, especiallyleaders in the internet finance sector, are also participating in this. Such fintechstart-up companies combine an internet platform with the expertise of a talentteam.

These companies use offshore fund structures, for example a segregatedportfolio company fund structure, to facilitate the accumulation of funds.Such a fund must comply with the laws and regulations both in China andin the offshore jurisdiction where the fund is established. As this is a newtrend, changes and adjustments in terms of both legal and business structur-ing are emerging.

The Chinese market is a combination of opportunities and challenges.Private equity and venture capital fund formation and downstream invest-ments, and other financing transactions in and out of China, need carefulstructuring and planning. Local knowledge and the support of Chinese mar-ket professionals can be critical for successful deal execution.

About the authorEdward Li is a partner at Zhong Lun Law Firm, specialising in privateequity, mergers and acquisitions and securities.

He started his legal career in 1994 in New York after graduating fromStanford University with a J.D. and a Ph.D. in economics. He practicedlaw at leading US law firms in New York and Hong Kong from 1994until 2009, before returning to Shanghai in 2010. His particularstrength is in combining his background in economics with legalanalysis to devise innovative solutions for his clients. He is a qualifiedlawyer in both China and New York State.

In addition to legal practice, he also teaches a course on cross-borderinvestment at the School of Economics and Management of TsinghuaUniversity, and is the author of Cross-Border Mergers and Acquisitions byChinese Companies, a leading textbook widely used in business schoolsin China.

Edward LiPartner, Zhong Lun Law Firm

Shanghai, ChinaT: +86 21 6061 3666F: +86 21 6061 3555E: [email protected]: www.zhonglun.com

About the authorDavid Xu focuses his practice on private equity and venture capital andhas represented major funds in their fund formation, and downstreaminvestments in various industries. He specialises in equity planning,corporate governance, and employee stock options plans design forstart-ups, and fund formation, fund management and fund exit. Inaddition, he has handled a number of cross-border mergers andacquisitions, as well as commercial and investment related disputes.Prior to joining Zhong Lun, he worked for over 10 years with leadinginternational law firms, and was head of private equity and venturecapital in his previous firm.

David XuPartner, Zhong Lun Law Firm

Beijing, ChinaT: +86 10 5957 2288F: +86 10 6568 1022/1838E: [email protected]: www.zhonglun.com


PRIVATE EQUITY SPECIAL FOCUS EGYPT

E gypt’s equity markets are supervised by two entities: the EgyptianExchange (EGX) and the Egyptian Financial Supervisory Authority(EFSA).

The EGX supervises daily trading (including the listing and de-listing ofsecurities), approves prospectuses for public offerings of secondary securities,and supervises market stability.

The EFSA is the main regulator for all financial non-banking services inEgypt. It is responsible for the issuance of securities, approving prospectusesfor public offerings of primary issuances of securities, and supervising compa-nies that provide services relating to the capital markets.

Egypt’s equity markets are regulated under the Capital Markets Law No.95 of 1992 and its executive regulations no. 135 of 1993, issued by theMinister of Economy and Foreign Trade. Companies Law No. 159 of 1981regulating joint stock companies, limited partnerships and limited liabilitycompanies is also applicable.

The equity markets are also subject to decrees issued by both the EFSA andthe Minister of Economy and Foreign Trade.

Equity markets and exchangesThe EGX is the primary and secondary equity market and exchange for stocksand bonds. The Nile Exchange is affiliated to the EGX for small and medium-sized enterprises (SMEs), although it is not as active as the EGX.

The EGX consists of two markets: • the official market, comprising of publicly listed companies. This is highly

regulated and supervised by the EFSA; and,• the unofficial market, where the transfer of unlisted securities takes place.

Although this is not subject to the same level of regulation as the officialmarket, transactions are still subject to the revision and approval of theEGX.

Listing on the EGX provides shareholders of the listed company, either ajoint stock company or a company limited with shares, with certain taxexemptions relating to the distribution of dividends and capital gain taxes.

However, these exemptions were recently subject to certain limitations thatcome into effect in May 2017. The limitations include taxing capital gainsachieved by trading in securities and taxing dividend distributions.

Distributions of dividends are taxable at 10%. However, this can bereduced to five percent if the shareholder to whom the dividends are distrib-uted holds more than 25% of the company’s capital or voting rights, and hasheld that shareholding for at least two years.

Listing on the EGX also imposes certain restrictions in connection withbuying and selling company shares. For example, mandatory public tenderoffers and notification on exceeding certain thresholds.

Equity offeringsPrimary listingsListing securities is subject to two sets of conditions: (i) general conditions thatapply to any type of security; and, (ii) conditions that apply to the specificsecurity.

Omar Bassiouny of Matouk Bassiouny sets out what you need to know about Egypt’s capitalmarkets


EGYPT

The general conditions include that the:• securities must be in a dematerialised form;• articles of incorporation of the issuing entity cannot include any restric-

tions on the transfer of securities;• issuing entity must enter into a contract with the relevant exchange to reg-

ulate the rights and obligations of each party and the consequences of anybreach by the issuing entity of the listing rules.

In addition to the general conditions, stock listings issued by Egyptiancompanies are subject to other specific conditions. These include that:• there are at least 300 shareholders in the company;• there are at least 5 million issued shares. To achieve this, a stock split is usu-

ally required to increase the total number of shares and/or decrease the parvalue per share;

• the company submits financial statements for the two years prior to thelisting request;

• the company’s net profits (before tax) must not be less than five percent ofits paid-in capital.

In addition, primary listing is only available to Egyptian companies.Foreign companies can only enjoy secondary listings.

Minimum size requirementsCompanies that want to list their shares on the EGX must have a fully paidcapital of at least EGP 50 million (approximately $5.6 million). For SMEs,the minimum paid capital is EGP 1 million; the maximum paid capital is EGP50 million.

Trading record and accountsThe company must have achieved net profits (before taxes) of no less than fivepercent of its paid-in capital. There are no trading record or working capitalconditions.

Minimum shares in public handsAt least 10% of the shares to be listed must be publicly offered. This is satisfiedif the shareholders holding at least 10% of the company’s capital are notfounders or main shareholders and the 10% is not subject to any pledge.Further, the listing of shares requires the existence of at least a five percent freefloat with a market value, at the time of the offering, of at least EGP 10 million.

The company’s main shareholders must undertake that their shareholdingwill not fall below 51% of their shareholding in the company and 25% of theissued capital of the company. This restriction applies for two financial yearsfrom the date of listing.

Companies that do not comply with the 10% minimum offering and 300shareholders requirements can be only listed if the company undertakes tofulfill the conditions within six months from the listing date. Its shares cannotbe traded during this period for purposes other than fulfilling these condi-tions.

Secondary listingsSecondary listing is available to Egyptian companies; the same conditions fora primary listing apply.

Secondary listing is available to foreign companies if certain conditions aremet. These include that:• the shares are listed on another exchange subject to the supervision of a

regulatory body with the same authority as the EFSA;• the shares are in EGP or another currency that can be converted into EGP;• the company has a legal representative in Egypt.

Minimum size requirementsA foreign capital listing on an equity market in Egypt must be for at least $100million. For SMEs, at least $10 million is required.

Trading record and accountsThere are no trading record, accounts record or working capital requirementsfor listing securities issued by foreign companies on the EGX.

Minimum shares in public handsThe foreign company must have at least 150 shareholders and at least fivepercent of the listed shares must be free-floating shares.

Structuring considerationsIn general, the offering is a combination of a private placement (that is, aninternational offering) and an Egyptian retail offering. The latter is necessary tocreate liquidity post-listing. In addition, the offering can take the form of aprimary or a secondary issuance of shares, or a combination of both. A primaryissuance may take longer than a secondary issuance.

Accordingly, the initial public offering (IPO) may be structured as a second-ary sale followed by a primary issuance in the form of a closed subscription tothe selling shareholders. The selling shareholders will finance their subscriptionin the primary issuance from the funds they receive from the secondary sale.

The choice of structure will depend on the company’s financial needs andthe shareholders’ goals. For example, a secondary issuance will assist the share-holders in achieving a partial exit, while a primary issuance is often a financingstrategy.

About the authorOmar S. Bassiouny is the co-founder and executive partner of MatoukBassiouny. He heads the firm’s corporate/M&A group and has beenconsistently ranked in the top tier by legal periodicals in the areas ofcorporate law and mergers and acquisitions. He has considerable expertisein setting up joint ventures and new projects in Egypt, as well as ensuringcompliance with local laws and corporate governance. He is recognisedfor his negotiations skills and business sense.

He has represented: Akanars Partners in connection with its merger intoArqaam Capital’s regional platform; Danone in connection with theacquisition of Halayeb; Valeant Pharmaceuticals in connection with theacquisition of Amoun Pharmaceutical’ Abraaj in connection with theacquisition of a majority stake in Tiba; and,

AXA Insurance in connection with the acquisition of CommercialInternational Life.

He graduated from American University Cairo in 1998 with a Bachelorsof Art in public and international law. In 1999 he graduated from CairoUniversity with a licence en droit.

Omar S BassiounyExecutive partner & head ofCorporate/M&A, Matouk Bassiouny

Cairo, EgyptT: +202 2796 2042E: [email protected]: matoukbassiouny.com


PRIVATE EQUITY SPECIAL FOCUS TAIWAN

L ast year was difficult for Taiwan’s economy. Gross domestic product(GDP) dropped to 0.85%, a record low since the 1999 financialcrisis. Dramatic changes in the financial market, a precipitous drop

in international oil prices, a change of government and a deadlock in tradenegotiations with China mean that 2016 is also a year of uncertainty.

Since taking office on May 20 2016, the new administration has pro-posed numerous new plans to improve economic performance. One of theproposals is to boost cross-border investments by encouraging local andforeign venture capital firms to invest in innovative start-ups.

Venture capital was first introduced in Taiwan in 1982. According tostatistics published by the Taiwan Venture Capital Association, 312 ven-ture capital enterprises had been established by the end of 2011. These

provided capital and management skills to 532 private companies, includ-ing technology companies (which represent approximately 38% of all list-ed companies in Taiwan). They also helped these companies to launch suc-cessful initial public offerings (IPOs).

The period from 1995 until 2000 is known as the golden age of venturecapital in Taiwan. However, fund-raising for venture capital in Taiwan hasbeen stagnant since 2001. The main reasons for this include: the dot-combubble; the 1997 Asian financial crisis; the 2008 global financial crisis; andthe cancellation of the investment tax credit offered to venture capitalinvestors. Regulatory restrictions also mean that Taiwan is not an idealjurisdiction for venture capital companies to raise funds.

Closely-held companiesTaiwan’s Company Act was enacted in 1929. It regulates all types ofcompanies in Taiwan, including single shareholder companies, publiccompanies, listed companies and foreign companies. The Company Act’smain purpose is to give protections to minority shareholders and creditors.While these protections are important for public companies, they are seenas barriers for venture capital firms to structure capital formation andshareholders’ rights for the start-ups in which they intend to invest inTaiwan. For example, the Company Act does not permit private companiesto issue shares below par value. In addition: articles of incorporation cannotinclude restrictions on share transfers; the terms and conditions of preferredshares are restricted; and, the valuation of payment-in-kind as a capitalcontribution is difficult.

A growth agendaSophia Yeh and Ken-Ying Tseng of Lee and Li Attorneys-at-Law explain why investing instart-ups is key to kick-starting Taiwan’s economy

“The semiconductorindustry...has inevitably becomea target for acquisition byChinese private equity


TAIWAN

Given its restrictive nature, the Company Act was amended in 2015 tointroduce a new form of company known as a closely-held company(CHC). A CHC is a private company with no more than 50 shareholdersand with share transfer restrictions. The aim of creating the CHC is tostimulate the growth of start-ups and small and medium-sized enterprises(SMEs) and to accommodate technology start-ups’ unique needs. Theamendments give CHCs more autonomy in their business operations andmore flexibility in share ownership arrangements.

Share transfer restrictions must be specified in a CHC’s articles of incor-poration or in a legend on its share certificates. A CHC may decide to issueeither par value shares or non-par value shares. In addition:

• so-called golden shares (shares with multiple voting rights or vetorights) may be issued;

• one preferred share can be converted into several ordinary shares; • shareholders meetings may be conducted via video-conferencing or

written resolutions;• voting agreements or agreements for shareholders’ voting trust are per-

mitted; • dividends can be distributed semi-annually; and,• the pre-emptive right of shareholders to subscribe new shares can be

waived.

It has been said that these traditional restrictions should have been liftedfor all companies in Taiwan to give them more flexibility to cope with theirbusiness and operational demands. However, due to the difficulty of con-ducting a wholesale overhaul of the Company Act, for the time being atleast, these restrictions have only been lifted for CHCs. It is hoped that,with these amendments, the Company Act will offer more investmentoptions for venture capital firms to invest in start-ups in Taiwan.

The new administration is expected to propose further amendments tothe Company Act to offer different legal frameworks for private and publiccompanies. However, it may be several years before these are enacted.

Limited partnershipsWhile venture capital and private equity firms often use partnerships forfundraising, this has not been the case in Taiwan because a partnership wasnot classified as a legal entity. As a result, the Limited Partnership Act wasintroduced in September 2015 to offer a new business vehicle for venturecapital and start-up investors.

Despite this reform, no partnerships have yet been formed. This isbecause of the unlimited liability imposed on general partners and the taxburden on the profit generated by the partnership. Under the LimitedPartnership Act, a partnership is still deemed a tax person for tax purposes.This means that the pass-through tax system for partnerships, as adoptedin most jurisdictions, does not apply to partnerships in Taiwan. Therefore,after a partnership has paid income tax on its profits, all partners must stillpay individual income tax on the profit distributed by the partnership.Until this tax issue is resolved, venture capital funds are unlikely to choosethis business form to invest in start-ups.

Taiwan Silicon Valley Tech FundTo further develop Taiwan’s technology start-up firms and promote the linkbetween start-up clusters in Taiwan and those in the US Silicon Valley, theMinistry of Science and Technology (MOST) and the NationalDevelopment Fund, Executive Yuan (NDF) are working together to enticedomestic and overseas venture capital firms to invest in promising youngcompanies. It is hoped that, based on venture capital firms’ marketknowledge and also investment selection via market mechanisms, theTaiwan Silicon Valley Tech Fund’s investments in Taiwan and Silicon Valley

start-ups will help young businesses survive the initial difficulties of raisingfunds and securing resources from experienced professionals.

If the programme is successful, it will help Taiwan become a leadingplayer in the global supply chain. Taiwan Silicon Valley Tech Fund is com-mitted to fundraising from 2015 to 2017. The total fund size is set to reach$300 million in three years. Of this, the government will invest a total of$120 million, with equal contributions from the MOST’s sci-tech devel-opment fund and the NDF. Combining funding from public and privatesectors, it is expected that the Taiwan Silicon Valley Tech Fund will reachNT$10 billion (approximately $309 million).

As of May 2016, two venture capital technology funds were seekingfunding from the NDF. Firstly, Vivo PANDA Fund, led by the founder ofa bio-tech venture capital firm, Vivo Venture Capital. It is worth $100 mil-lion and will target investments in bio-tech start-ups in both Taiwan andthe Silicon Valley. The second is a venture capital fund raised by WIHarper Group, with an initial fund scale of $175 million. This will focuson the TMT and healthcare industries.

China’s private equity investmentThe Chinese government has been implementing steps to enhance thecompetitiveness of its semiconductor industry with the aim of reducing itsdependency on imported chips. It has encouraged Chinese private equityfunds to acquire global semiconductor companies to obtain integratedcircuit-related intellectual property rights.

The semiconductor industry plays an important role in Taiwan’s hi-techbusiness and has inevitably become a target for acquisition by Chinese pri-vate equity. The recent acquisition targets of Chinese private equity inTaiwan are integrated circuit design and packaging and testing companies.Tsinghua Unisplendour announced in 2015 that it will invest in Taiwanintegrated circuit design leader MediaTek and three semiconductor pack-aging and testing companies, including SPIL, PTI Technology andChipMos Technologies. These account for a combined total of 17% of theglobal output of the semiconductor packaging industry.

According to Taiwanese laws governing Chinese investments in Taiwan,Chinese investors can only invest in businesses listed on a so-called positivelist, subject to the approval of the Investment Commission (IC). TheDemocratic Progress Party (DDP), the current ruling party, have stronglyobjected to Unisplendour’s planned investments. DDP deemed thatUnisplendour’s investment in these integrated circuit packaging and test-ing companies would help the Chinese government establish a so-calledRed Supply Chain in the semiconductor industry, uprooting the industryfrom Taiwan to China.

As a result, Unisplendour dropped its proposed investment in SPIL butstill submitted applications for approval of its investments in PowerTechand ChipMos. This has created a dilemma for Taiwan’s semiconductorindustry. On the one hand, it cannot isolate itself from the so-called RedSupply Chain. China’s market opportunities, local resources and policyincentives are all seen as reasons for Taiwan’s semiconductor-related indus-tries to expand to the mainland and explore new opportunities.Nevertheless, allowing Chinese private equity to invest in Taiwan’s semi-

“2016 is a year of change andchallenges for Taiwan’s new

government

conductor industry may be a risk to the whole industry because core tech-nology, capital and talent could flow into China. It is still uncertainwhether the IC will deny Unisplendour’s equity investments in Taiwanbecause of national security concerns.

Mezzanine financingStart-ups in Taiwan struggle to get bank financing because they don’t havethe collateral to secure loans. As a way to stimulate economic growth andhelp innovative start-ups secure financing, the Taiwan Financial andSecurities Supervisory Committed plans to launch mezzanine financing inthe third quarter of 2016. It will do so by making financial institutions setaside a percentage of their profits to invest in the so-called Angel Fund. Itis estimated that if each bank sets aside two percent of its profits, an AngelFund of NT$16 billion per year can be raised to invest in innovative start-ups. Based on the total net worth of banks in Taiwan, NT$260 billion maybe available to invest in Angel Fund. However, banking related regulationswill have to be amended to lift the restrictions imposed on banks’ investmentin non-banking sectors.

Private equity in TaiwanInternational private equity’s investments in Taiwan have been slow in recentyears. In recent cases of private equity firms seeking to either invest inTaiwan or exit from the Taiwan market, the Taiwanese government has beencriticised for a lack of transparency in its reviews of applications. Forexample: KKR’s acquisition of shares in Yageo, a Taiwan-based electroniccomponent manufacturing company, via a tender offer was denied; MBK’swithdrawal of its investment in Taiwan’s largest cable television operator has

not been approved for six years after several changes of purchasers; and,Calyle’s withdrawal of its investment in a television broadcasting channel isstill pending the IC’s decision. On the other hand, CVC acquired a listedcompany in 2007, privatised it in 2008, and then helped it transform intoa multinational company and relisted on the Taiwan Stock Exchange in2015.

In response to criticism that it is not friendly to foreign private equity,the IC explained that if the latter helped Taiwanese companies restructure,and brought new capital into Taiwan, instead of having high financialleverage, Taiwan’s government would encourage foreign private equity,provided it is not controlled by Chinese funds or investors.

2016 is a year of change and challenges for Taiwan’s new government.Communications with China for the enhancement of trade and invest-ments have reached an impasse. Taiwan’s economy faces one of its biggestchallenges since the financial crisis. In response, the new administration iscommitted to doing everything it can to attract foreign direct investment(FDI) from foreign private equity and venture capital firms.

Whether the new government will restrict inbound investments fromChinese investors in hi-tech sectors is still unknown. For outbound invest-ments, the new administration is planning to encourage Taiwan’s private sec-tor to invest in South East Asia to diversify the risk from further investmentsin China. The IC has established a policy of attracting more private equity toinvest in Taiwan and, at the same time, helping start-ups and SMEs to expandinto the global market and become multinational companies.

About the authorSophia Yeh received an LLM from the University of Pennsylvania LawSchool after obtaining an LLB from National Taiwan University. Shecontributed to drafting the bill for Taiwan’s Enterprise Mergers andAcquisitions Act to improve the legal framework for cross-bordermergers and acquisitions in Taiwan.

Among other M&A deals, she handled the following major transactionsfor private equity: HSBC’s acquisition and disposal of Tung LungMetal; Carlyle’s sale of TBC; Carlyle’s acquisition and subsequent saleof Kbro and EBC; Oaktree’s acquisition and privatisation of Fu Shengand subsequent exit; CVC’s acquisition and privatisation of Nien Madeand subsequent exit; and, Omnivision’s sale to a Chinese private equityconsortium.

She has been named one of the best leading counsel in corporate/M&Aby Asia Pacific Legal 500, Chambers Asia and Asia’s Leading Lawyersfor Business in Taiwan.

Sophia YehSenior counsellor,Lee and Li, Attorneys-At-Law

Taipei, TaiwanT: +886-2-2183-2245F: +886-2-2713-3966E: [email protected]: www.leeandli.com

About the authorKen-Ying Tseng co-heads Lee and Li’s M&A practice group. Shereceived an LLM from Harvard Law School after obtaining anLLM/LLB from National Taiwan University. Having advised on variousforms of M&A, she is experienced in resolving legal and commercialissues. The major transactions that she has handled include: the sale ofChina Times; the merger of Taimall (the first shopping mall in Taiwan)and GIC; Eaton’s tender offer for Phonixtec Power; Arrow’s acquisitionof Ultra Source and subsequent delisting; MBK’s acquisition of CNS;MStar’s pre-IPO restructure; Yahoo’s investment in Gomaji;ScinoPharm’s investment in Tanvex; Komatsu’s acquisition ofGigaphoton; and, Micrel’s acquisition of Phaselink.

She was recognised as a Leading Lawyer in the M&A field by Asialaw in2013 and 2014, and by IFLR 1000 in 2014 and 2015.

Ken-Ying TsengPartner, Lee and Li, Attorneys-At-Law

Taipei, TaiwanT: +886 2 2183 2179F: +886 2 2713 3966E: [email protected]: www.leeandli.com


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