EQT-backed LBX hits trading cap on Shanghai debut

LBX raised RMB1.01 billion ($163 million) through its IPO, selling 67 million new shares at RMB16.41 apiece, according to a filing. The stock opened at RMB23.63 on April 23 and was soon temporarily suspended from trading after reaching the maximum permitted intra-day gain of 10%. It subsequently closed at RMB23.63.

Based in Hunan province, LBX was founded in 2001 by Zilong Xie. It claims to be the first retail pharmaceutical chain to follow a low-price superstore strategy in China. As of the end of last year, it had 999 stores in 15 provinces and municipalities across China.

EQT acquired a 48% stake in LBX for about $80 million in 2008 through EQT Greater China II, a $545 million buyout fund that closed in 2006. From 2008 to 2011, LBX opened around 75 new stores each year, EQT said. Although much of the expansion was organic, the firm also completed five add-on acquisitions. According to AVCJ Research, LBX acquired Hunan Xiangtan Haicheng Pharmaceutical Chain Stores in 2009 and Anhui Baxingyuan Pharmaceutical Chain in 2011.

The private equity firm now has a 34.77% stake in LBX on a diluted basis, which is subject to a 36-month lock-up period.

LBX filed for an IPO in February 2012 but it took more than two years to materialize. The Chinese Securities Regulatory Commission (CSRC) put a freeze on IPO approvals in late 2012 as it was seeking for further reform of the capital market.

LBX generated RMB3.94 billion in revenue last year, up 18.72% from 2013. Its net profit rose 23% to RMB238 million in 2014.

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• Topics
• Greater China
• Consumer
• Exits
• Healthcare
• China
• healthcare
• Exit
• IPO
• EQT Partners
• Consumer