China fast tracks IPO by leading biotech firm WuXi AppTec, in race as Asia’s hub for fundraising

Mainland’s leading biotech firm privatised in New York two years ago, but has been fast-tracked towards the A-share market just seven weeks after applying to list

PUBLISHED : Tuesday, 27 March, 2018, 11:40pm
UPDATED : Wednesday, 28 March, 2018, 10:39am

WuXi AppTec, the mainland’s leading biotechnology firm which privatised in New York two years ago, has been given the green light to relist on the A-share market via an initial public offering (IPO) in Shanghai, just seven weeks after filing its application.

The listing is expected to raise more than 5.7 billion yuan (US$907.5 million), which the firm will use to expand research facilities and build new plants.

The lighting-fast approval adds further evidence that competition among exchanges in Hong Kong, China and Singapore is heating up as they scramble to list promising technology companies.

AppTec was the first Chinese tech firm to privatise in New York. The company is a contract research organisation (CRO) which helps drug makers shorten their discovery and development procedures, while lowering overall costs.

It is considered China’s leading CRO, according to Ivan Li, an asset manager with hedge fund Loyal Wealth Management.

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“The regulator is believed to have been closely monitoring its fundamentals and operations for a while. AppTec is among China’s profit stars of the future,” he added.

The company was worth US$3.3 billion when it privatised in New York at the end of 2015, with reported net profits of 1.06 billion yuan for the first nine months of 2017 after earning 975 million yuan in the previous full year.

Its IPO follows a steady pipeline of Chinese firms, including anti-virus software maker Qihoo 360 Technology, going public on the A-share market in recent months through reverse merge deals, or back-door listings.

Both Shanghai and Shenzhen bourses – under the direction of the China Securities Regulatory Commission (CSRC) – have been bending over backwards to lure foreign-funded technology start-ups operating in the mainland since the turn of the year, anxious not to lose out to rival exchanges in Hong Kong, New York and Singapore.

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The CSRC had previously actively blocked technology start-up flotations if their ownership structures and profitability were not in compliance with strict domestic listing rules, before making a U-turn this year by actively chasing “unicorns” – unlisted tech firms with valuations of more than US$1 billion.

Earlier this month, Foxconn Industrial internet, a unit of the world’s biggest contract manufacturer whose products include Apple’s iPhones, secured the CSRC’s go-ahead to launch a 27 billion yuan IPO just five weeks after filing its listing application.

“AppTec’s fast track approval is likely to mean more unicorns will be attracted to the A-share market because valuations there are higher,” said Huatai Securities analyst Liu Qiaoyu.

The Shanghai exchange has already said it has a list of promising technology firms that is hopes will list on the mainland, pledging to help them overcome difficulties in accessing the domestic capital market.