Taiwan-based technology companies, which accounted for the vast majority of capital raised via global depositary receipts in 2003, are returning to the market. In one of the biggest issues of the year to date, Chi Mei Optoelectronics, or CMO, which makes flat screens for computers and televisions, raised $751 million in June through a follow-on offering of GDRs.
CMO jumped into the market ahead of a wave of new offerings by technology companies in Taiwan, which need capital to expand, in part to serve the fast-growing Chinese market.
A global leader in the production of flat TV screens, CMO told investors on its road show for the offering that the market for these displays is ready to rise sharply now that retail prices have fallen. The company expects flat-screen TVs to begin retailing for less than $1,000 by the end of this year.
CMO will use part of the proceeds of its GDR offering to double the capacity of its existing plant and to build a $1.1 billion facility to make screens up to 47 inches that is scheduled to begin production in 2007. Like many Taiwanese issuers, CMO made use of Rule 144A instruments available only to institutional accounts. These issues are relatively quick and inexpensive, since they don’t have to be registered under the Securities Act. CMO was only the sixth Taiwanese company to access the equity markets this year, but a number of flat-screen manufacturers are ready to follow. Quanta Display plans either a rights issue or a GDR issue. AU Optronics plans to launch an ADR this year.