Four investors prescribe US$550m for drug company
Shanghai Pharmaceuticals, China's second-biggest distributor of pharmaceutical products, has secured US$550 million from four cornerstone investors for its Hong Kong public offering this month, according to a person familiar with the matter.
Temasek Holdings is said to be investing US$300 million, Guoco Group US$150 million and Pfizer and Bank of China Group Group Investment US$50 million each.
The lock-up period, when the investors will not be able to sell the shares, will be one year.
The shares will be sold to the cornerstone investors at HK$21.80 to HK$26 per share, the person said, adding that the institutional investors might buy up to 95 per cent of the shares, leaving the remaining 5 per cent to Hong Kong retail investors.
Shanghai Pharmaceuticals declined to comment.
The company, which manufactures, sells and distributes health-care products, starts its roadshow in Hong Kong today. Shares will be open for sale to retail investors from May 6 to May 12. The company will begin trading on the Hong Kong stock exchange on May 20.
Shanghai Pharmaceuticals plans to issue about 664 million shares in Hong Kong, with around 99 million available in case of oversubscription.
Upon listing in Hong Kong, it will gain access to international investors and will be required to operate with more transparency.
The company said in September that it planned to raise at least 8 billion yuan (HK$9.5 billion). But based on its A-share price as of Friday, it could raise as much as 15 billion yuan with the offering.
The company is expected to use a large part of the proceeds to repay a bridge loan it took during a 3.56 billion yuan acquisition of Citic Pharma, a pharmaceutical distributor in Beijing, in April. The acquisition significantly expanded the company's operations and market share in northern China.
Another part of the proceeds might be used to repay the company's debt for acquiring the antibiotic business operations from its mother company, Shanghai Pharma Group, for about 1.49 billion yuan in December.
The company has hired Credit Suisse, Deutsche Bank and Goldman Sachs to handle its listing. According to its pre-listing document, it is China's second-largest distributor of pharmaceutical products and was the country's third-largest pharmaceutical company in terms of revenue in 2009.
Shanghai Pharmaceuticals underwent a restructuring from 2009 to early last year and has been aggressively expanding through acquisitions since then.
The restructuring was partly brought about by the national government's efforts to consolidate the fragmented pharmaceutical industry.
China's pharmaceutical industry is expected to grow by a compound annual growth rate of 13.7 per cent from 2009 to 2014, according to the company's pre-listing document.
Healthy prospects
The pharmaceutical company set out to raise at least 8 billion yuan
However, based on its A-share price on Friday, it could raise as much as this amount, in yuan: 15b yuan
