Here’s one way risk-averse investors can get into Chinese health care: private equity

Investors keen to back China’s health care companies before they get to IPO but wishing to avoid exposure to risky early-stage drug developers could consider “late stage” private equity funds, according to a senior executive at C-Bridge Capital.

“There are quite a few China-focused health care private equity firms but usually people only hear venture capital stories [of huge financial gains],” said managing director Sean Cao Wuxiong.

“Private equities are less exciting, if you invest 100 dollars, you may get back 300 to 400 dollars, but they are less risky.”

The Shanghai-based private equity firm, partly backed by a unit of Singapore’s sovereign fund manager Temasek Holdings, has over US$800 million of assets under its management and is one of the major players behind a surge in investment in China’s health care sector.

C-Bridge is a backer of prenatal genetic-testing services provider Berry Genomics – one of the largest rivals to state-backed genomics giant BGI – which listed last year via a reverse takeover deal with a Shenzhen-listed firm at a valuation of 4.3 billion yuan (US$683 million).

“[Our founders] saw huge growth opportunities in China’s health care industry, due to its ageing population, demand for better drugs, medical devices and services as people become wealthier and have more education,” Cao said.