FountainVest backs China iKang Healthcare’s take-private

According to a regulatory filing, Ligang Zhang, founder and CEO of the company, and FountainVest-owned vehicle FV Investment will pay $17.8 per share for all outstanding American Depository Shares (ADS). This represents a 10.8% premium to the closing price on August 28, immediately prior to the take-private bid being submitted. The offer values the company at approximately $1.2 billion.  

The buyer group intends to fund the transaction with a combination of debt or equity, and roll-over equity in the company. The offer is subject to approval from iKang's shareholders.

The healthcare service provider raised $153 million in a US IPO in April last year, having raised capital from several PE investors. NewQuest Capital and GIC Private both made partial exits through the offering. NewQuest sold around 783,000 shares, reducing its holding from 6.1% to 2.1%, while GIC Private lowered its stakes from 14.6% to 10.3% through the sale of 600,000 shares.

Goldman Sachs did not sell any shares in the IPO, but its interest was diluted from 13% to 10.8%.

Meanwhile, Best Investment Corporation, an investment vehicle controlled by China Investment Corporation (CIC), bought $40 million worth of Class A common shares in iKang, representing a 4.6% stake. 

Set up in 2004, Beijing-based iKang provides medical examination services across a network of 77 medical centers. It served 1.7 million employees from 11,200 corporate customers in 2012 plus a further 206,000 individual customers. The company claims to hold a 13.6% market share of China's private preventative healthcare services market.

NewQuest acquired its stake in iKang - then known as ShanghaiMed Healthcare - in 2007 as part of a consortium of early-stage investors that participated in a $22 million funding round. Other early investors included ePlanet Ventures, WI Harper, Walden International and Shanghai Ventures.

The company reported a net loss of $75 million for the year ended March 2013, compared to a profit of $4.6 million in 2012. Revenue jumped from $93.7 million to $133.9 million over the same period. In the quarter ended June this year, revenue was up 43.4% year-on-year at $60.2 million this year, while net profit reached $10.7 million, a gain of 448% on the same period last year.

FountainVest has also participated in take-private deals for Focus Media, Shanda Games and LJ International.

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• Topics
• Greater China
• Healthcare
• Buyouts
• China
• Fountainvest Partners
• healthcare
• buyout