PE-backed WuXi AppTec targets Hong Kong listing

WuXi AppTec was established in 2000 by a team of four working out of a single laboratory. It gained traction on the back of increased interest among multinational pharmaceutical companies in outsourcing parts of the drug discovery process to lower-cost Chinese operators. The company listed in the US as WuXi PharmaTech in 2007. Eight years later, Ge Li, the founder and CEO, teamed up with a private equity consortium to acquire the business at a valuation of $3.3 billion.

Following the privatization, the company was reorganized into three entities: WuXi Biologics, which listed in Hong Kong last year, raising $510 million; WuXi NextCode, a genome sequencing business that has received several rounds of private funding; and WuXi AppTec, which went public in Shanghai in May, raising $328 million. The stock closed at RMB87.45 on September 19, up 111.3% on the IPO price.

The investors that supported the WuXi PharmaTech take-private – Boyu Capital, Ally Bridge, Temasek Holdings, Hillhouse Capital, Ping An Insurance, Yunfeng Capital, Sequoia Capital, Legend Capital, and Shanghai Pudong Development Bank (SPDB) – ended up with a majority stake, but a minority voting interest, in an offshore entity that controlled the WuXi Biologics. Li retained the majority voting interest.

As part of the reorganization, the equity interests in this entity were pushed down a level, giving the investors direct exposure to WuXi AppTec. These holdings do not necessarily represent an investor’s complete interest in the company. Boyu, for example, has an 8.52% stake through the push down from the offshore entity and a further 6.89% through other entities. Ally Bridge’s overall direct exposure is 7.11%, while Temasek and Hillhouse have 7.81% and 6.02%, respectively.

WuXi AppTec is an end-to-end new drug R&D service platform, covering the entire drug discovery, development, and manufacturing value chain. It focuses on small molecule drugs, whereas WuXi Biologics is involved in the outsourced development of more complex treatments that require a different set of technologies and manufacturing capabilities to produce.

During the 12 months ended June 2018, the company worked with 3,380 customers, from all the top 20 global pharmaceutical players to VC-backed drug development start-ups and virtual companies. The company operates from 26 sites and branches scattered across China, the US and Europe, according to its prospectus. WuXi AppTec recorded RMB7.76 billion ($1.13 billion) in revenue last year, up from RMB6.12 billion in 2016. Over the same period, net profit rose from RMB1.12 billion to RMB1.29 billion.

The proceeds of the offering will be used to expand capacity, recruit more talent, and invest in cutting-edge technologies through in-house R&D and acquisitions.

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• Topics
• Greater China
• Healthcare
• IPO
• China
• Boyu Capital
• Ally Bridge
• Sequoia Capital
• Hillhouse Capital Management
• Temasek Holdings
• Yunfeng Capital