Taiwan telecom sale nets $1.65bn

Chunghwa could reawaken interest in state sell-offs

Taiwan's finances got a boost on Friday after the government raised $1.65bn (£1.04bn) by selling a 12% stake in state-controlled Chunghwa Telecom.

Most of the sale - 965 million of the 1.165 billion shares on offer - went to foreign investors, in the shape of bundles equivalent to 10 shares apiece sold on the US markets.

The move reduces the government's stake in Chunghwa to 69%, and the success of the current offering should help the state sell its holding down to 50% by the end of the year as intended.

It also will at least make a dent in an estimated 238bn Taiwanese dollar ($6.9bn; £4.5bn) deficit for 2003.

But the sale was partly driven by a lucrative dividend deal, promising investors a return eight times higher than what short-term local bonds are producing.

The generous dividend makes up for the three-year delay in getting the sale off the ground, and was intended to make sure the sale was a success after investors failed to show much interest in an initial sale attempt earlier this year.

At the time, the lack of a significant discount made the idea of buying into a tech stock flotation less than attractive, analysts said.

But more recently, technology flotations have taken off again in Taiwan, with the Chunghwa sale taking the total to almost $2.8bn in July alone.

Electronics shares generally are up 40% since a trough in late April.