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Sandy Li

Cheung Kong (Holdings) has applied to the stock exchange to spin off and list its biotechnology division on the Growth Enterprise Market.

CK Life Sciences International (CKLS), a 60-40 joint venture between Cheung Kong and its chairman, Li Ka-shing, has committed more than HK$1 billion to develop technologies for which it is seeking patents.

Cheung Kong said its stake in CKLS would be diluted to between 40 and 50 per cent from its existing level following the share offer.

New shares will be offered to the public and placed with certain professional, institutional and other investors, including employees of CKLS and qualifying shareholders.

The company said the proposed spin-off did not need shareholder approval.

The announcement did not indicate the listing's timing, but it has been reported the joint venture aimed to list as early as July.

The spin-off would allow CKLS to raise funds and increase its capital base for future expansion and enable future fund-raising by Cheung Kong to be focused on the development of its core businesses, other than biotechnology.

The move would enhance the transparency of CKLS's businesses given the different operating characteristics of the biotechnology operations and those of Cheung Kong.

It could also provide incentives for the management and staff of CKLS to develop its business by linking management's remuneration to the company's share price performance through share options.

CKLS could establish a higher profile as a separate listed entity with the ability to access debt and equity markets to finance the development and expansion of its projects, the company said in its statement to the exchange.

CKLS products cover five areas - eco-agriculture, bioremediation, pharmaceuticals, nutraceuticals and dermatologicals.

Early this year, the company introduced its NutriSmart fertiliser to farmers in five countries.

The company said it developed its own technology called Cell Selection, Activation and Acclimatisation, defined as modifying proteins to perform a chosen function in a cell.

Earlier, it said it had submitted 20 patent applications, and drafted an additional 40.

According to analysts, the purpose of the popular United States biotechnology business model was to sell intellectual property patents.



Cheung Kong to list biotech unit