China Everbright fund to buy stake in LifeTech Scientific

The China Everbright Fund will buy a 22.4% interest in LifeTech for an undisclosed sum, while the rest of Medtronic’s holding will go to another investor, according to a filing. Based on its May 4 closing price of HK$2.40, LifeTech had a market capitalization of HK$10.39 billion ($1.3 billion), giving China Everbright’s stake a valuation of around HK$2.33 billion.

Medtronic entered into a strategic alliance with LifeTech in 2012, paying HK$361 million for 19% of the company and HK$152 million for a convertible note that would give it an additional 7.4%. The conversion was completed in late 2016. As of year-end 2017, Medtronic had a 24.95% equity interest in the company.

The alliance was also intended to give Medtronic access to China, while LifeTech would receive expertise from the US-listed company to develop its manufacturing capabilities and product pipeline. In 2014, they agreed to produce pacemakers and other cardiac devices for the Chinese market. Even though Medtronic will no longer be an investor, collaboration with LifeTech is set to continue.

“We recognize Medtronic's contribution to product line expansion, internationalization and quality control system of LifeTech in the past five years. CEL and LifeTech management will continue to build our long-term strategic relationship with Medtronic. We will also leverage resources of CEL to fully support the sustainable development of LifeTech,” Fu Feng, head of China Everbright’s healthcare fund, said in a statement.

In addition to pacemakers, LifeTech produces minimally invasive medical devices such as occluders, stents, filters, and plugs used during heart surgery. The company’s distribution network covers Europe, South America, Asia, and Africa – it claims to be the second largest supplier globally of occluders for congenital heart diseases – but China still accounts for more than three-quarters of overall revenue.

Earlier this year, the company agreed to partner healthcare-focused private equity firm Ally Bridge Group on investments in global medical technology companies. LifeTech will commit capital to Ally Bridge's funds and also establish joint investment vehicles with the GP.

In 2017, LifeTech reported revenue of RMB409.1 million ($64.3 million), up from RMB352.8 million the previous year. Over the same period, net profit rose from RMB145.7 million to RMB163.5 million.

China Everbright raised RMB600 million for its first healthcare fund in 2012 and closed a second vehicle at RMB1.2 billion three years later. A third fund is said to be in the process of being launched.

The group manages HK$129.1 billion across 48 funds in total and has backed more than 300 companies through its fund management and principal investment business. Areas of interest include real estate, healthcare, new energy, infrastructure, advanced technology, high-end manufacturing, financial technology, and consumption.

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• Topics
• Greater China
• PIPEs
• Healthcare
• China
• China Everbright