Chinese surgical instruments firm Kangji Medical to raise up to US$404 million in Hong Kong IPO, names Hillhouse Capital, BlackRock among cornerstone investors

Kangji Medical, a mainland Chinese provider of minimally invasive surgical instruments, is raising up to US$404 million in an initial public offering before a listing on the Hong Kong bourse, joining several other health care and biotechnology Chinese start-ups that are preparing to tap investor funding this summer.

Cornerstone investors Hillhouse Capital, BlackRock, FMR, Cormorant Asset management, OrbiMed Capital, Lake Bleu Capital and Oaktree Capital have taken up a combined US$165 million of the listing’s international placement tranche.

Kangji has set the indicative price range at HK$12.36 (US$1.6) to HK$13.88 a share, valuing the company at a price-to-earnings multiple of 26.2 times to 29.4 times based on its 2021 expected earnings. The offer shares represent about 18 per cent of the company’s enlarged issued share capital, according to the deal’s term sheet.

The Hong Kong offering will start on Tuesday and last until Friday, June 19, when the final pricing will be determined. Listing on the main board is scheduled for June 29. Bank of America, Citic Securities and Goldman Sachs are joint sponsors of the deal.

With just four health care IPOs completed this year to date raising US$1.25 billion for the sector, Hong Kong faces fierce competition from the Shanghai Stock Exchange, which has completed 13 health care IPOs raising a combined US$1.69 billion.

US private-equity manager TPG, an existing shareholder, will sell 33.81 million of its shares in Kangji as part of an overallotment option, if the IPO raises strong investor demand. TPG invested in the Zhejiang province-based company in December 2017, at a price of 76.84 yuan a share, or about 1.44 billion yuan, for a 25 per cent stake, according to a preliminary prospectus filed with the Hong Kong stock exchange.