Hillhouse-backed CRO Frontage raises $205m in HK IPO

The company sold 501.9 million shares at HK$3.20 apiece, with three cornerstone investors covering approximately 41.5% of the offering, according to a filing. They include Hillhouse Capital, which was also one of seven pre-IPO investors that committed $32 million to Frontage in March 2018. Ally Bridge Group, Qiming Venture Partners, and OrbiMed were among the others.

Tigermed Group, another Chinese CRO, is the company’s controlling shareholder. It acquired a 67% stake in Frontage for $50.25 million in May 2014, taking out several existing investors. They included Baird Capital Partners Asia, the China-focused arm of Baird Private Equity, which invested $10 million in 2008. Tigermed now owns 51.45% of the business, while Hillhouse has 7.77%, the prospectus indicates.

Frontage operates in the US and China. It specializes in bioanalytical services that are used by customers throughout the drug discovery and development process. This accounted for more than half of revenue in 2018. Other testing services involve drug metabolism and pharmacokinetics, safety and toxicology, and chemistry, manufacturing and controls. The company also provides bioequivalence testing for generic drugs.

Tigermed does not offer bioanalytical and bioequivalence services, which means there is minimal crossover in their respective businesses. However, the parent’s customers are offered access to Frontage’s services and the two companies share ownership of subsidiaries providing biostatistics, data management and statistical programming services.

Revenue came to $83.1 million in 2018, up from $70.25 million a year earlier. Services provided in the US account for approximately two-thirds of the total. Over the same period, net profit rose from $10.2 million to $11.2 million.

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• Topics
• Greater China
• Healthcare
• IPO
• China
• Hillhouse Capital Management
• Ally Bridge
• Qiming Venture Partners
• OrbiMed