MGI Tech closes China's largest-ever genetics funding round
MGI Tech, a Chinese manufacturer of gene sequencing devices, has raised more than $1 billion in funding led by IDG Capital and CPE.
Other investors include Huaxing Growth Capital, Guofang Capital under Shanghai International Group, Huatai Zijin Investment under Huatai Securities, Ti Capital, Sailing Capital, Co-Stone Capital, Dingfeng Asset, and Guotai Junan Venture Capital. Existing backers Goldstone Investment - a PE unit of CITIC Securities - and Green Pine Capital Partners re-upped. It is said to be the largest-ever funding round in China's genetics technology space.
Founded in 2016 as a subsidiary of Shenzhen-based BGI Group, the world's largest genetics research center, MGI Tech now employs more than 1,000 staff and claims to be one of the three manufacturers globally with in-house research and mass production capabilities for high-throughput sequencers. It has eight branches worldwide and more than 500 customers in 50 countries and regions.
In May 2019, MGI Tech raised $200 million in funding led by Goldstone, which was less than the sum targeted, as reported by Caixin at the time. The substantial increase in size for the latest round - plus the interest of many investors - reflects surging demand in response to the COVID-19 outbreak.
On January 26, Chinese regulators gave emergency approvals for four new coronavirus detection products. One of them was for DNBSEQ-17, an ultra-high-throughput sequencer made by MGI Tech. This sequencer was officially released in September 2019. It is estimated that, in the absence of the pandemic, it would have taken more than a year to obtain a medical license for the product.
With BGI Group-controlled BGI Genomics already listed in Shenzhen, MGI Tech is expected to follow suit, according to people familiar with the matter. While MGI Tech is an upstream player, focused on gene sequencers, BGI Genomics concentrates on the downstream side. It specializes in genetic disease screening, tumor diagnosis, and precision medicine. Sequencer design and manufacturing is said to present the highest technical barriers in the industry supply chain.
BGI Genomics previously mainly purchased equipment from Illumina, a US sequencer manufacturer with a market capitalization of $53 billion. However, MGI Tech is gradually replacing Illumina as a supplier to its sister company amid the US-China trade tensions.
The starting point for MGI Tech was the acquisition in 2013 of US-based CompleteGenomics (CG). BGI immediately set up a sequencer R&D team in Shenzhen to study the core patent technology and launched its own sequencers in 2014.
Huaxing Capital was the exclusive advisor on MGI Tech's latest funding round.
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