China's Qiming targets listed healthcare businesses
Qiming Venture Partners is mobilizing its newly launched public equities unit – and $500 million fund – to participate as an anchor investor in Hong Kong IPOs by Chinese healthcare companies.
It is part of a broader strategy whereby the unit, known as Springhill Fund, will invest in healthcare public equities with an initial focus on Greater China and the wider Asia region, according to a source close to the situation. The goal is to build a concentrated portfolio of long-term holdings across various healthcare sub-sectors.
The source added that the more than $500 million raised from unnamed investors represents an initial commitment. This tallies with the fund’s status as an open-ended investment vehicle, with a separate Hong Kong-licensed manager, Springhill Fund Asset Management. Nevertheless, Springhill is referenced in filings as Qiming’s public equities unit.
The venture capital firm closed its seventh US dollar-denominated China fund at $1.2 billion last year, securing most of the capital in the two months ended April 2020. There is expected to be a 50-50 split between technology, media and telecom (TMT) and healthcare, compared to 60-40 in favor of TMT in the previous vintage. About 25% has been earmarked for later-stage rounds, primarily in healthcare.
Springhill is one of 15 investors that put $190 million into a HK$3.1 billion ($399 million) IPO by Keymed Biosciences, which has five clinical-stage drug candidates for oncology and autoimmune conditions. Several other cornerstone participants are active in private and public equities. Indeed, Hillhouse Capital, Boyu Capital, Lilly Asia Ventures, and Lake Blue Capital are also pre-IPO investors in Keymed.
Other China-based venture capital firms with separate public equities units include Sequoia Capital China, which invests in technology stocks globally via Sequoia China Equity Partners, a Hong Kong-based hedge fund operation.
Supporting companies from private rounds through the public secondary market has become more prevalent in Hong Kong ever since regulators started permitting listings by pre-revenue biotech companies in 2018. This has turned the territory into the second-largest biotech IPO venue globally, but it also means that start-ups are going public earlier in their lifecycles.
PE and VC-backed companies from across China’s healthcare sector, raised $829 million through Hong Kong IPOs in 2017, AVCJ Research’s records show. This rose to $2.5 billion in 2018, $3.3 billion in 2019, and $7.7 billion in 2020. There were 25 listings in 2020, more than the previous eight years combined. Nearly two-thirds were pre-revenue biotech players.
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