PE-backed WuXi Apptech trades flat on Hong Kong debut

A total of 133.95 million shares were sold in the offering, 17.5 million above the official allocation, at HK$68 apiece, near the middle of the indicative range, according to a filing. This gave the company a market capitalization of HK$9.1 billion ($1.01 billion). The stock opened at HK$67 on December 13 and closed at HK$68, while the Hang Seng Index was up 1.26%.

WuXi AppTec will use the proceeds to expand its capacity globally, acquire other contract drug research and manufacturing organizations, enhance R&D capabilities, pay down debt, and invest in and incubate other healthcare companies.

The company 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 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 now holds 8.48% stake of the company and a further 6.86% through other entities, while Temasek and Hillhouse hold 7.77% and 5.98%, respectively. Ally Bridge holds 7.06%.

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.

Revenue came to RMB7.76 billion ($1.13 billion) last year, up from RMB6.12 billion in 2016. Over the same period, net profit rose from RMB1.12 billion to RMB1.29 billion.

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