
PE investors complete $4.6b China Biologic take-private
An investor group including Centurium Capital, CITIC Capital and Hillhouse Capital has completed its protracted pursuit of China Biologic Products Holdings with a $4.6 billion privatization.
Other participating investors include Temasek Holdings and Hong Kong-listed medical device manufacturer PW Medtech Group. They submitted an offer of $120 per share for all outstanding shares in September 2019, a 16.8% premium to the previous close. The consortium already owned a 58% stake, leaving $1.93 billion worth of shares to be bought from other investors.
Now this process has concluded, the company has been delisted, according to a statement.
Founded in 2002, China Biologic produces plasma-based biopharmaceuticals use to treat life-threatening and immune-deficiency-related diseases. It manufactures 20 different dosage forms, but most of the revenue comes from human albumin, which is used to treat conditions such as blood loss trauma, and intravenous immunoglobulin. Products are distributed to 600 hospitals and clinics in China.
Centurium’s relationship with the company began in 2010 when founder David Li – then at Warburg Pincus – was involved in several growth-oriented investments. For years, China Biologic operated in a seller’s market: underpenetrated, undersupplied, and with a stable client base. The dynamics then changed, and the company required improvements in sales and marketing and operational efficiencies to ease pressure on the bottom line.
This set the scene for two competing take-private offers submitted in mid-2018. One was from CITIC of $110 per share and another from a consortium including CDH Investments, GL Capital, and former China Biologic CEO David Gao of $118 per share.
The company responded by issuing $590 million in new shares to Centurium, CITIC, Hillhouse, and PW Medtech. Following that investment, PW Medtech held 16.08%, while Centurium, CITIC, and Hillhouse had 7.76%, 6.82%, and 6.63%, respectively. Centurium, which committed $307.7 million on its own, subsequently increased its holding to 14.4%.
China Biologic generated revenue of $524.4 million in 2020, up from $503.7 million the previous year. Human albumin and immunoglobulin for intravenous injection (IVIG) accounted for 32.3% and 29.4% of sales, respectively, but the growth momentum lies in IVIG. Over the same period, net profit rose from $163.4 million to $178.3 million.
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