Deal focus: A Sino-French solution to liver disease

Echosens specializes in non-invasive diagnostic devices for hepatology. Its flagship product - known as FibroScan - tracks changes in the liver tissue following treatment. The technology, described as more reliable and cost efficient than a traditional biopsy, has been approved for sale in 87 countries and used for clinical trials in more than 2,000 hospitals.

Following the acquisition by FuRui, Echosens' sales increased 35% year-on-year, and revenue exceeded EUR30 million ($33.4 million) last year, most of it coming from international exports.

Last week, a consortium led by Sino-European GP Cathay Capital paid FuRui EUR52.5 million in cash for a 49% interest in Echosens and committed a further EUR30 million to support further M&A and R&D activity by Echosens in the field of liver disease. Cathay's individual contribution to the deal was EUR40 million, while other two investors - OrbiMed Advisors and Luxemburg Sunshine International - put in EUR18 million and EUR24.5 million, respectively.

"Echosens as a company is a perfect match with Cathay Capital's DNA and its profile corresponds very well with our philosophy and investment strategy, which looks to find success stories within sectors experiencing strong growth led by talented management teams and entrepreneurs, whose business growth could be enhanced by the implementation of cross-border strategies," says Lanchun Duan, managing partner at the PE firm.

FuRui will use the proceeds of the transaction to develop its online-to-offline (O2O) healthcare management services, with a particular focus on chronic liver diseases.

This is the first investment made from Cathay's Sino-French Midcap Fund, which was launched last year. The vehicle reached its hard cap of EUR500 million in December last year, with a view to supporting French and Chinese companies in the mid-cap segment to implement cross-border growth strategies.

Following the investment, the GP plans to help Echosens accelerate its international growth over the next three to five years, with the US and China the major target markets. Efforts will also be made to improve corporate governance and risk management.

Apart from France, the fund is also looking at investments elsewhere in Europe, notably among Germany's small- to medium-sized enterprises (SMEs). Cathay wants to complete 10-12 deals, with a focus on industrial products, healthcare, consumer, technology and media. "We have a couple of investments originated in both Europe and China currently in the pipeline of the Midcap Fund and they should be announced in the coming months," says Duan.

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• Topics
• Healthcare
• Greater China
• Europe
• Expansion
• Cathay Capital Private Equity
• China
• Europe
• Growth capital
• healthcare