PE-backed Hygeia completes $286m Hong Kong IPO

The company sold 120 million shares at HK$18.50 apiece, with both the Hong Kong and international portions of the offering heavily oversubscribed, according to a filing. However, nine cornerstone investors – including Hillhouse Capital, OrbiMed and Lake Blue Capital – together picked up nearly half of the shares.

Hygeia's stock opened at HK$22.80 on June 29 and peaked at HK$27.70 before falling back to close at HK$26, a 40.5% premium to the IPO price. The company now has a market capitalization of approximately HK$15.6 billion.

Founded in 2009, Hygeia claims to the market leader in China by revenue generated from radiotherapy-related services and by number of installed radiotherapy machines. The company is owner and operator of 10 oncology-focused hospitals and supplies equipment to radiotherapy centers on a contract basis in 15 third-party hospitals. It also offers training and technical support.

Last year, 946,637 patients visited Hygeia's own hospitals and 59,207 were treated at radiotherapy centers it manages. Revenue for the year came to RMB1.1 billion ($155.5 million), up from RMB766 million in 2018. Over the same period, net profit rose from RMB2.4 million to RMB39.7 million. The company's own hospitals account for 87% of revenue, with over half of that coming from inpatient care.

According to Frost & Sullivan, cancer incidence in China grew from approximately four million to 4.4 million cases between 2015 and 2019. It is expected to reach 5.1 million in 2025. Radiotherapy is one of the most common oncology treatment options, but it is significantly underpenetrated compared to developed countries.

Warburg Pincus has a 13.79% stake in Hygeia, having first invested in the business in 2015. It committed $75 million over two years, comprising $49 million in new equity and $26 million to take out a position held by New Enterprise Associates (NEA). Boyu and CITIC, which together invested RMB500 million in 2016, own 6.2% and 5.5%, respectively.

Two more rounds – of RMB230 million and $37.8 million – followed in 2017 and 2019, according to the prospectus. Of the first tranche, RMB139 million was used to acquire more shares from NEA. Huagai Capital, WuXi AppTec and Long Hill Capital were among the participants. They now hold stakes of 2.5%, 1.89% and 0.83%, respectively.

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• Topics
• Greater China
• Healthcare
• IPO
• China
• Warburg Pincus Asia
• Boyu Capital
• CITIC Capital
• Long Hill Capital