UPDATE 1-Schroders to buy Taiwan's E.Sun fund unit

(Adds comments, details)

By Jeanny Kao

TAIPEI, July 17 (Reuters) - Schroders (SDR.L) will buy the fund arm of Taiwan's E. Sun Financial (2884.TW) for T$523 million ($17.2 million) as the British fund manager aims to tap the island's lucrative T$4 trillion ($132 million) mutual fund industry.

Taiwan's fund industry, with about T$4 trillion under management in on-shore funds and off-shore funds combined, has lured global names, including Janus Capital Group (JNS.N) and BlackRock (BLK.N). "Taiwan is a major asset management market in Asia, with high GDP per capita and savings ratio," Schroders' Asia Pacific Chief Executive Lester Gary told reporters on Thursday.

In 2007, Taiwan had per capita GDP of $16,800 and a savings rate of about 30 percent of GNP, according to government figures.

The acquisition will let Schroders expand its business to sell funds targeting Taiwan stocks or bonds by raising money from Taiwan investors. Currently, it sells off-shore funds, or funds raised overseas, on the island.

The transaction translates into T$15.75 per share, Schroders said in a statement.

Global fund managers have been eyeing Taiwan's improving ties with China, which helped the island's stock market outperform some of its Asian peers after the China-friendly Nationalist Party won the legislative and presidential elections this year.

The growing pension fund and wealth management business, one of the largest in Asia, is also an attraction to foreign investors. (Writing by Faith Hung; Editing by Ken Wills)