TAIWAN Trends and Developments Contributed by: Lihuei Mao (Grace), Derrick Yang, Rose Huang and Yu-Ting Su, Lee and Li Attorneys-at-Law
Overview The role of private equity funds in Taiwan has grown, developed and evolved over time. In the past, offshore private equity funds, particularly those from interna - tional firms, dominated in terms of both deal number and fund size. However, with the increased geopoliti - cal tensions, investments by PRC private equity funds in Taiwan are subject to more stringent scrutiny and have been scaled back. In the past five years, the government has promulgated policies encouraging the set-up of local private equity funds. These funds are increasingly making their mark on local deals by investing in infrastructure, renewable energy, semi - conductors and other technology sectors. The local funds have not only invigorated Taiwan’s investment ecosystem but also strengthened the momentum for industrial upgrade and transformation. Recent Developments Influences by the global economic environment Over the past three years, global private equity fun - draising has experienced a downturn, mainly due to the uncertain economic outlook. Both the number of investment deals and the total amount of money raised are on the decline. The withdrawal of global capital and decreasing corporate valuations have affected market activities. The number of large-scale deals has decreased, shifting towards small and medium-sized transactions. Taiwan is not immune from the global downturn. In addition to the fence-sitting approach adopted by offshore private equity funds due to rising geopolitical tensions, the Taiwan Central Bank’s high interest rate policy has increased borrowing costs, resulting in a decline in the overall number of private equity-backed deals in Taiwan. Market outlook Owing to market uncertainty and volatility, certain investors are seizing disruptive investment oppor - tunities to invest in new markets or businesses to strengthen their market position, while other inves - tors are scaling back their investments in Taiwan and concentrating on internal restructuring and transfor - mation for potentially higher yields. Notwithstanding the headwind and challenges, a modest recovery in private equity transactions and M&A deals is expect - ed in 2025. Semiconductor and AI-related industries continue to attract investors’ attention. Transactions
in renewable energy industry also carry a positive momentum. Another noticeable trend is the diversified collabora - tions between private equity funds and local compa - nies. Private equity funds have joined forces with local industrial giants for outbound investments, by lever - aging the transaction expertise and global network of the private equity fund together with the partner’s industrial insights. In addition, rather than simply act - ing as limited partners, local companies and CVCs are entering into co-general partner (co-GP) arrange - ments with the private equity funds, working along - side experienced GPs to foster the growth of portfolio companies. These types of collaborations are tailor made and expected to continue going forward. Key industries for private equity investments In recent years, private equity investments, both inbound and outbound, have been highly concen - The rapid advancement of AI technology, in combi - nation with Taiwan’s leading R&D technologies in the semiconductor industry, has made Taiwan uniquely positioned in the global semiconductor supply chain. Taiwan’s strengths in innovation and production capa - bilities have become essential for the development and deployment of advanced AI systems. With the support of a robust infrastructure, a skilled workforce and progressive government policies, Tai - wan has bolstered its position as a global leader in these sectors. Both domestic and international inves - tors, as well as private equity firms, are increasingly investing in Taiwan’s AI and semiconductor supply chain, including integrated circuit design, manufactur - ing, data centres, servers and cloud computing, and reshaping their investment strategies to align with the expansion and integration of the supply chain. trated in the following areas in Taiwan. AI and semiconductor supply chain In 2024, TXOne Networks, a Taiwan-based lead pro - vider in cybersecurity solutions, secured approxi - mately USD51 million in Series B financing from the Asian private equity fund TGVest Capital and other private equity funds. Also in 2024, Smart Ageing Tech, a Taiwan-based company specialising in healthcare
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