Taipei, Jan. 1 (CNA) The National Development Fund under the Executive Yuan will invest in a new solar energy company as part of the government's promotion of green energy in Taiwan, according to sources close to the deal.
The sources said the fund, which focuses on seed, start up, restructuring, and mergers and acquisition investments, to speed up the pace of industrial development in Taiwan, has decided to take a stake in a new company to be formed by three Taiwanese solar energy firms -- Neo Solar Power Corp., Gintech Energy Corp. and Solartech Energy Corp.
The decision was made at a meeting held on Dec. 27 where the fund studied the possibility of investing in the new solar firm, though the amount to be invested and other details have yet to be determined, the sources said.
In October, Neo Solar Power, Gintech Energy and Solartech Energy announced a merger, which will be the largest-ever deal of its kind in the Taiwan solar energy industry if it goes ahead.
The merger will create a company with NT$21.1 billion (US$70.57 million) 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 deal is expected to be completed in the third quarter of next year, and the company will be called "United Renewable Energy Co." (UREC).
The new company will try to solicit government funds for further investment at a time when the government is promoting "5 plus 2" innovative industries, including the renewable energy business, according to Neo Solar Chairman Sam Hong.
Before the sources indicated the National Development Fund had decided to invest in UREC, local media reported the fund was expected to inject NT$4.5-NT$5 billion.
The reports also said the Ministry of Economic Affairs (MOEA) is eying a seat on the new company's board of directors to demonstrate the government's support for renewable energy development.
The sources said the Cabinet set up a NT$100 billion fund through the National Development Fund last year in a bid to help local industries upgrade, and the investment in the new solar firm will come from that fund.
However, doubts have arisen over the investment in UREC as the three partners are all unprofitable.
In the first nine months of last year, Neo Solar, Gintech Energy, and Solartech Energy incurred losses per share of NT$3.51, NT$2.20 and NT$2.07, respectively.
The National Development Fund is the largest single shareholder in Taiwan Semiconductor Manufacturing Co., the world's largest contract chipmaker.
