China's Luye Pharma Group wants to step up its game--and some of its key investors want to cash out. So, it's planning an initial public offering in Hong Kong worth up to HK$5.9 billion, or about $761 million.
The IPO would take Luye Pharma back to public-company status two years after a management-led buyout left private equity owners--including Singapore's sovereign wealth fund--with a controlling interest in the company. That buyout valued the company at about $541 million, Bloomberg says.
Luye says it's planning to use its share of the IPO proceeds to fund acquisitions, invest in R&D and build up its production capacity. Luye has R&D and production sites in Beijing, Nanjing, Yantai and Sichuan, China, as well as sites in Malaysia and Singapore. Its products including cancer, cardiovascular and central nervous system drugs, including some cornerstone generic cancer meds. It has also taken on process-development work for Western drugmakers, including GlaxoSmithKline ($GSK) and Novo Nordisk ($NVO), through its A-Bio Pharma group, the company's website notes.
The company and its investors plan to sell almost 1 billion shares at HK$5.38 to HK$5.92 each. Among the selling shareholders are Chinese private equity firms CDH Investments Fund Management and Citic Private Equity Funds Management, Bloomberg says. The company has a half-dozen key investors already committed to buy $280 million in stock, including Orbimed and Prime Capital, which will each put in $50 million.
Luye is one in a number of Chinese drugmakers delisted since 2010, and the first of the group to attempt an IPO. If it's successful, a wave of follow-up offerings could follow. The deal is set to price July 3, Reuters notes.
The IPO news comes amid a tumultuous period for drugmakers in China. Government officials have been cracking down on alleged corruption in the pharma industry, with GSK executives facing criminal charges. Other multinational drugmakers have come under scrutiny, including Novartis ($NVS), Sanofi ($SNY), Novo and Lundbeck.
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