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CDH, CITIC, New Horizon buy Luye Pharma from MBK

  • Susannah Birkwood
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CDH Capital, Citic Private Equity and New Horizon Capital, three of China's largest private equity firms, have bought Luye Pharma from Korea-based MBK Partners.

According to a regulatory filing, Hygeia Holdings, a wholly-owned subsidiary of MBK, transferred its entire 77.41% stake in Singapore-listed Luye Pharma to Luye Pharmaceutical Investment. The private equity firms will hold more than 50% in Luye Pharmaceutical Investment.

A source told The Wall Street Journal that the shares sold at a substantial premium to their market value, which was $140 million (or S$0.94 per share) when trading closed last Thursday.

Headquartered in Shanghai, Luye Pharma is a major specialty pharmaceutical company focusing on drug-delivery systems in China. It engages in the develops and sells patented prescription medicines in various fields, including oncology, orthopedics and neurology. Luye Pharma reported a pre-tax profit of RMB1.47 billion ($233 million) for 2011, up 29.6% year-on-year.

MBK invested in the firm in April 2008 via its MBK Partners I vehicle.

This deal represents a rare secondary buyout transaction in China, which some believe emphasizes the difficulties investors there are facing in exiting their shareholdings. The region's IPO market, which has in the past delivered lucrative returns for private equity firms, has been struggling since the middle of last year.

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