An Apple provider primarily based in Taiwan is battling a global investor over its multibillion-dollar money pile in a case that alerts burgeoning shareholder activism within the territory.
Catcher Expertise, which manufactures digital casings for Apple gadgets made in China, is being challenged by Hong Kong-based funding agency Argyle Avenue Administration to enhance its governance and return a few of its $4.2bn of web money to shareholders, in line with folks accustomed to the discussions.
Argyle holds about 1 per cent of Catcher’s shares and is one in every of a variety of its overseas institutional shareholders alongside Franklin Templeton, Singapore’s GIC and Cathay Life Insurance coverage. It has approached Catcher executives over its considerations in a gathering in Taiwan, one of many folks mentioned.
Shareholder activism has grown extra slowly in Asia than within the US due to the dominance of family-controlled corporations, however current high-profile battles together with in Hong Kong over HSBC and Financial institution of East Asia, and in Japan over Toshiba, have raised its profile.
International investor urge for food for Taiwan has elevated in recent times, with overseas direct funding rising 275 per cent to a 15-year excessive of $8bn within the first half of 2022 owing to the nation’s massive industrial base and its standing as a gateway to China.
Nevertheless, the island’s tech-reliant inventory market been hit following a sell-off by international funds and fears of a US recession.
Argyle has accused Catcher’s administration of “hoarding money” and utilizing it to help a “bloated” govt construction, in line with two folks with information of the state of affairs. The corporate has a market capitalisation of about $4bn on Taiwan’s inventory alternate and is run by three brothers of the Hung household who sit on its board.
In 2020, Catcher bought two items from its Chinese language division that equipped Apple with iPhone casings for $1.43bn to a smaller competitor, Lens Expertise, primarily based within the mainland province of Hunan. The divestment of one in every of its principal income mills got here as Chinese language corporations pitched for brand new alternatives to entry Apple’s coveted provide chain following the China-US commerce conflict.
Argyle argues that, regardless of the disposal, Catcher has paid a “low” dividend of NT$10-NT$12 per share for the previous 5 years that has totalled NT$42.95bn ($1.43bn) and mentioned it will preserve that dividend degree for the following three years.
About 15 per cent of shares within the Tainan-based firm are owned by the Hung household, together with its chair Allen Hung, and roughly 43 per cent owned by overseas establishments.
Catcher mentioned it was “at present within the stage of enterprise transformation” and was diversifying into areas together with manufacturing automotive components and medical expertise.
“The money place we saved is especially for funding alternatives,” the corporate mentioned. “We pay at the very least 50 per cent of earnings as money dividends. The money dividends we’ve paid every year over the previous 5 years is actually equal to our paid-in capital, primarily above market common.”
In July, Taiwan prosecutors charged 14 folks together with members of Catcher’s analysis and improvement group with breach of belief and taking business secrets and techniques to be used abroad. Catcher mentioned in a press release on the time that it “co-operates with the investigation and follows judicial procedures and judgments”.
Taiwan has stepped up efforts in recent times to stop the leak of delicate applied sciences, comparable to semiconductors, to the mainland. In 2021, Taipei moved to limit home tech corporations from promoting belongings or subsidiaries to Chinese language companies.