Hong Kong IPO: WuXi Biologics to spin off contract research, manufacturing unit via US$520 million deal in biotech push

WuXi Biologics is spinning off its 60 per cent-owned WuXi XDC via a Hong Kong IPO to allow unit to pursue its own growth path
Firm could raise as much as HK$4.07 billion (US$520 million) including excess share issue, based on the top-end of IPO price range

IPO

SCMP Reporter

Published: 2:30pm, 7 Nov 2023

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WuXi XDC Cayman Inc could raise as much as HK$4.07 billion (US$520 million) from its initial public offering (IPO) in Hong Kong this month, using the cash to expand its contract research and manufacturing services in the pharmaceutical and biotechnology industries.

The firm, a 60 per cent-owned unit of WuXi Biologics, will sell 178.4 million new shares to investors at an indicative price range of HK$19.90 to HK$20.60 per share, according to its listing prospectus published on Tuesday. An additional 19.2 million shares may be allotted to global investors to meet excess demand, it added.

At the top end of the price range, the firm will collect HK$4.07 billion in gross proceeds including the overallotment portion, and boost its expected market value to HK$24.7 billion.

The firm will start taking orders from investors from today, and the listing date is tentatively set for November 17 under the 2268 stock code.

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Morgan Stanley, Goldman Sachs and JPMorgan Chase are the joint sponsors of the stock offering. They are also joined by China International Capital Corp, Citigroup, and HTSC as the six joint global coordinators, bookrunners and lead managers.

The listing could help bourse operator Hong Kong Exchanges and Clearing (HKEX) arrest a slowdown in its IPO business. Proceeds from stock offerings plunged to a 20-year low in the first nine months of the year, according to Refinitiv data, dropping the local market to ninth place among global IPO venues.

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More interesting candidates are waiting in the queue to list including home appliances maker Midea Group and Alibaba-backed courier from Cainiao. The city recently also hosted several small and midsized IPOs, including courier services firm J&T Global Express and Tencent-backed car services platform Tuhu.

WuXi XDC provides integrated and end-to-end research, development, manufacturing services on contract basis related to antibody drug conjugates (ADC) for global customers. The size of the ADC market is forecast to grow from US$7.9 billion in 2022 to US$64.7 billion in 2030, according to Frost & Sullivan.

After the spin-off and listing, WuXi Biologics will reduce its stake in WuXi XDC to 50.9 per cent. Hong Kong-listed Wuxi Apptec’s stake of about 40 per cent will fall to just under 34 per cent, according to the IPO prospectus.

The listing will enable the unit to develop a unique global-leading contract services in the industry facing a growth inflection point, WuXi added. The IPO will help the unit create its own fundraising platform and define its own business focus and strategy, it added.

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