Chinese pharma privatisation boom set to continue, say analysts
Privatisation followed by relisting increases company valuations
The high levels of activity in the Chinese pharma business market look set to continue at least until the middle of 2014, analysts predict. In the past few years, private equity firms have taken dozens of Chinese companies private, hoping to re-list them elsewhere for better valuations.
A case in point is Chinese drug company Luye Pharma Group, based in Shandong Province, which is backed by Chinese private equity firms, and is planning an initial public offering (IPO) in Hong Kong during the first half of this year, according to media reports. Luye Pharma is aiming to raise around US$750m in the planned IPO.
Luye Pharma had previously invested Singapore$6m in NuSep's Singapore subsidiary, Prime Biologics, in exchange for a 10% interest in the company. Under the terms of the deal, NuSep issued Luye with six million shares in Prime Biologics. The transaction was executed through Luye Pharma's subsidiary A-Bio Pharma, and valued Prime Biologics at S$60m. The deal enabled NuSep to establish a physical presence for Prime Biologics in Singapore.
In March 2012, CDH Investments, CITIC Capital Holdings and New Horizon Capital had acquired a majority stake in Luye Pharma for an undisclosed amount from Asian private equity firm MBK Partners. The three private equity firms, together with Luye Pharma's founders, took the company private in August 2012, through a management buyout. The management team and the three private equity firms owned 92.63% of the company before the buyout. Luye Pharma was then delisted from the Singapore stock exchange after the privatisation deal.
