Shanghai Fosun Pharmaceutical
Shanghai Fosun Pharmaceutical (Group) Co Ltd is a unit of one of China’s largest conglomerates Fosun International. Already listed in Shanghai, the group plans to raise about US$512 million through an initial public offering in November 2012, and said it would use about half the proceeds for domestic and international acquisitions, and the rest for research and development and to pay down debt.
Generic drugs firm to grow sideways
Shanghai Fosun Pharmaceutical, a unit of mainland conglomerate Fosun International, said it plans to grow horizontally through acquisitions of drug makers that offer synergies with its products.
"From an integration perspective, we are interested in buying scaleable drug manufacturing operations that could provide an imminent boost to our revenue, profitability, market share, as well as our brand awareness," Chen Qiyu, chairman and executive director of the firm, said yesterday.
In Hong Kong's first major listing since the US$900 million IPO of Inner Mongolia Yitai Coal in July, Fosun Pharma plans to raise up to US$593 million by issuing 336.07 million H shares, after reducing its original target of US$1 billion early this year.
Fosun Pharma manufactures generic medicines for cardiovascular, infectious and alimentary diseases and in oncology.
Chen said at a briefing in advance of its initial public offering that investors should not overlook the firm's manufacturing performance and treat Fosun Pharma primarily as a private equity investor, since it has a long track record in drug production.
The Shanghai-based company's prospectus says it is among the top five most profitable drug makers in China, which suffers from a highly fragmented and inefficient market.
Fosun Pharma, which has been listed in Shanghai for 14 years, is pricing its share at an indicative range of HK$11.80 to HK$13.68, translating into a price-earnings ratio of 12.1 to 14 times next year's earnings, much lower than the average of 16 times of its Hong Kong-listed peers.
The shares offering is oversubscribed because of the participation of a sovereign wealth fund, a person familiar with the situation said.
China International Capital Corporation, Deutsche Bank, JP Morgan and UBS are the sponsors for the deal.
Meanwhile, in the face of poor market sentiment, a Tingyi proposed US$118 million equity placement was called off after a handful of investors said the discount on the shares was "unattractive" to capture enough interest in Hong Kong.
Block trades generally offer a discount of at least 5 per cent of the average share price in the previous 20 trading days.
The company offered 38.27 million shares at an indicative price range of HK$23.75 to HK$24 per share, translating into a discount of a paltry 1 to 2 per cent from yesterday's closing price of HK$24.25, a term sheet showed.
Goldman Sachs was the bookrunner of the Tingyi transaction.
A representative at the bank confirmed that the deal has not taken place and declined to comment further.
Tingyi is well known for its iced-tea drinks and Master Kong branded instant noodles.