On January 6, 2025, the board of directors of Walsin Lihwa, a renowned Taiwanese manufacturer of stainless steel wire rods and cables, approved a EUR 60.5 million capital injection into its Italian subsidiary, Cogne Acciai Speciali. This strategic decision is set to further enhance the company’s control and influence over the subsidiary, while also positioning it for sustained growth within the global stainless steel market.
The investment will be made through Walsin Lihwa’s Luxembourg subsidiary, Walsin Lihwa Europe, and is structured to increase Walsin Lihwa's indirect shareholding in CAS from 70% to 71.83%. The move is part of a broader effort to strengthen Walsin Lihwa's operations in Europe, particularly in the stainless steel sector, where it has been seeing positive growth.
Capital Injection and Investment Structure
The capital increase will be channeled through a multi-step process. First, Walsin Lihwa will inject the EUR 60.5 million into Walsin Lihwa Europe S.a r.l. (WLE), its wholly-owned subsidiary located in Luxembourg. WLE will, in turn, pass the funds onto MEG S.A., another 100% owned subsidiary of Walsin Lihwa. MEG S.A. will then execute the capital increase in CAS.
Once the capital injection is completed, Walsin Lihwa’s indirect shareholding in CAS will increase to 71.83%. This will solidify the company’s position as a dominant player in the European stainless steel industry, particularly in the high-value specialty steel market where CAS operates. CAS is known for producing a range of high-quality stainless steel products, and this investment will likely enhance its production capacity and technological capabilities.
Strengthening Presence in Europe
This capital increase is part of Walsin Lihwa’s strategy to further consolidate its European presence. The company has long considered Europe a key market for its stainless steel products, and by increasing its stake in Cogne Acciai Speciali, Walsin Lihwa is not only boosting its control over CAS but also positioning itself for greater influence in Europe’s stainless steel and alloy manufacturing sectors.
By enhancing its stake, Walsin Lihwa will gain more control over CAS’s operations, product offerings, and distribution channels. This also provides Walsin Lihwa with more direct oversight of the subsidiary’s growth, particularly as demand for high-quality stainless steel products continues to rise in Europe and surrounding markets.
Repayment of Bank Loans
In conjunction with the capital increase, the board also approved a cash capital increase plan for Walsin Lihwa itself. This plan allows for the issuance of up to 400,000 shares to generate funds for the repayment of bank loans. The move is designed to improve the company’s financial flexibility and ensure that it can continue its growth trajectory without being burdened by high levels of debt.
Repaying the loans will help improve Walsin Lihwa’s balance sheet and reduce financial strain. It is also a sign of the company's ongoing commitment to maintain a strong financial foundation, enabling it to pursue future investments and acquisitions, such as the capital increase in CAS, with greater ease.
Strategic Objectives
This strategic move by Walsin Lihwa highlights the company’s commitment to enhancing its global operations, particularly in the European stainless steel market. The EUR 60.5 million capital increase and the resulting increase in ownership stake are clear indicators of Walsin Lihwa’s long-term plans to grow and solidify its role as a key player in the global stainless steel industry.
Additionally, the company’s decision to repay bank loans via the cash capital increase illustrates its broader goal of achieving sustainable financial health. With this strong foundation, Walsin Lihwa is poised to further invest in key sectors, expand its production capacity, and meet increasing market demand.
Future Outlook for CAS and Walsin Lihwa
Following this capital boost, Cogne Acciai Speciali S.p.A. will likely benefit from enhanced resources, allowing it to expand its production capabilities, innovate in product development, and explore new market opportunities. For Walsin Lihwa, this move serves as a cornerstone for strengthening its foothold in Europe, ensuring a stronger competitive edge in the global steel industry.
With this increased stake, Walsin Lihwa will have more leverage in decision-making at CAS, allowing the company to directly influence its subsidiary's strategic direction. This could result in better integration with Walsin Lihwa’s broader corporate goals and more efficient operations in the European market.
As global demand for high-quality steel products, including stainless steel and specialty steel, continues to grow, Walsin Lihwa is well-positioned to capitalize on this trend by reinforcing its European market presence and expanding its portfolio of products and services. The company's ongoing investments will likely lead to higher profitability, stronger market leadership, and enhanced product offerings for its customers worldwide.
