Chinese cosmetic surgery business seeks $32.5m in US IPO

The company plans to raise up to $32.5 million through the sale of 2.5 million American Depository Shares at $11.00-13.00 apiece, according to a filing. IDG’s owns 9.5% of Aesthetic Medical, while ADV holds 24.6%. ADV is the largest shareholder after the co-founders, husband and wife Pengwu Zhou and Wenting Ding, and their family, who own 64.4%. No one will sell any shares in the offering, so their holdings will be marginally diluted.

IDG’s involvement with Aesthetic Medical stretches back to 2012 when it participated in a Series A round for the company alongside TDR Capital and CMHJ Partners. The company’s Hong Kong IPO prospectus from 2015 indicated that IDG held a 10.6% stake. Zhou and Ding had 72.4%.

Aesthetic Medical – then known as Pengai Hospital Management Group – allowed its Hong Kong listing application to lapse. Special situations investor ADV committed $22.6 million to the company in late 2016, subscribing to a combination of convertible notes and exchangeable notes. The former will be redeemed using proceeds from the IPO; the latter will be exchanged for shares on listing.

Zhou, an experienced plastic surgeon, and Ding established Aesthetic Medical in 1997. It serves as a one-stop-shop for aesthetic treatments such as eye surgery, rhinoplasty, breast augmentation, and liposuction. The company also offers a range of treatments based on traditional Chinese medicine, including herbal oral medications, dietary advice, herbal poultices and foot baths, ultraviolet negative ion beauty treatments, ultrasounds, acupuncture, cupping, massage, and skin scraping.

It claims to be the third-largest private aesthetic medical services provider in China, based on 2018 revenue. China was the world’s second-largest market for such treatments worldwide that year, with expenditure reaching RMB121.7 billion ($17.2 billion), out of a global total of $125.8 billion. Frost & Sullivan projects that industry revenue in China will reach RMB360.1 billion by 2023.

The company has 21 treatment centers across 15 cities, up from 14 in 11 cities in 2015. It employed 567 staff, of which 203 were doctors, as of June 2019. Active customers – defined as those who have received at least one procedure in the past year – totaled 178,657 in 2018 compared to 108,291 in 2016. Aesthetic Medical’s strategic partners include So-Young International, a Chinese cosmetic surgery marketplace. The PE-backed company raised $166.8 million through a NASDAQ IPO in May.

Aesthetic Medical generated RMB761.3 million in revenue for 2018, up from RMB697.4 million the previous year. Approximately 40% of revenue comes from surgical aesthetic treatments. The company’s net loss widened from RMB72.4 million in 2017 to RMB252.5 million last year, although it was profitable in 2016 and for the first six months of 2019.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• Healthcare
• IPO
• Consumer
• China
• ADV Partners
• IDG capital