Prudential, the UK insurer, is seeking approvals from regulators in 15 markets for its mighty $35.5bn acquisition of the bulk of AIG's Asian assets. Primus Financial Holdings and China Strategic Holdings, both Hong Kong-based investment groups, need a nod from just one – Taiwan's. But their task might be trickier.
The pair's joint $2.2bn acquisition of Nan Shan Life Insurance, agreed with AIG in October, is Taiwan's biggest inbound financial deal, almost double the size of Standard Chartered's acquisition of Hsinchu International four years ago. Yet the bidders' difficulties are less to do with size and more with suspicions that they are backed by China-sourced funds.
Diplomatic relations have thawed since President Ma Ying-jeou took office two years ago and dropped the pro-independence stance of Chen Shui-bian, his predecessor. Cross- strait investment, however, remains an almost entirely westward affair. Taiwanese companies have ploughed more than $80bn into the mainland over the past two decades; until June last year, Taipei refused any reciprocal investment at all. China Mobile was supposed to unleash a wave of deals by taking a small stake in Taiwan's Far EastOne; almost a year later, it is still awaiting approval. Signing of the cross-Strait Economic Co-operation Framework Agreement, a free trade pact, has suffered repeated delays. Taipei's recent missile purchases, meanwhile, have unnerved investors almost as much as Beijing. Last year the Taiex was the world's 13th best performing major equity index; so far this year it's 77th.