The consortium led by China Strategic Holdings Ltd. (0235.HK) shouldn't have agreed to sell a stake in Nan Shan Life Insurance Co. to Chinatrust Financial Holding Co. (2891.TW) before its acquisition of Nan Shan receives Taiwan's regulatory approval, Lu Ting-chieh, secretary general of Taiwan's Financial Supervisory Commission, said Friday.
"The timing was wrong, and the whole arrangement was just very crude, which has put the credibility of the China Strategic consortium in question," Lu said. "It totally complicates the approval process."
Lu was referring to a plan by Hong Kong-based China Strategic to sell 30% of Nan Shan to Chinatrust in exchange for a 9.95% stake in Chinatrust, the island's largest bancassurance services provider with a 30% market share.
Chinatrust announced the deal Tuesday around a month after American International Group Inc. (AIG) agreed to sell its 97.5%-owned Nan Shan to the China Strategic-led consortium for US$2.15 billion.
The Investment Commission, which vets all inbound and outbound investments, turned down the consortium's application to acquire Nan Shan earlier this month and told it to submit more documents.
After receiving approval from the Investment Commission, the consortium comprising China Strategic and Primus Financial Holdings Ltd. will need to receive approval from the financial regulator before the deal can be completed.
-By Perris Lee Choon Siong, Dow Jones Newswires; +8862-2502-2557; perris.lee@dowjones.com