TPG-backed Dingdang Health raises $51m in Hong Kong IPO

The company, which counts TPG Capital among its investors, has sold approximately 33.5m shares for HKD 12.00 apiece, according to a filing. This was its second attempt at a listing – the first was rejected by regulators last year – and the targeted amount was reportedly scaled back from USD 100m. Cornerstone investors covered nearly three-quarters of the offering.

Market volatility has contributed to a severe slowdown in Hong Kong IPOs. According to AVCJ Research, about half a dozen private equity-backed offerings have generated proceeds of less than USD 1bn so far this year. In 2021, nearly USD 12bn was raised from 30 offerings.

While there has been a recent influx of new filings from the likes of fitness business Keep, electric vehicle manufacturer Leapmotor, and artificial intelligence technology specialist Fourth Paradigm, the journey from filing to trading is not necessarily smooth. YH Entertainment, a Chinese artist management company backed by CMC Capital, recently postponed its IPO during the pricing process.

Dingdang has raised nearly USD 500m in private funding, including a USD 220m Series C last year led by TPG and featuring OrbiMed, Redview Capital, Summer Capital, Valliance Asset Management, Yingke Private Equity, and Orchid Asia. SBCVC, Dragon Gate Investment Partners, Chunfeng Venture Capital, and Tongdao Capital are among the investors that participated in earlier rounds.

CMB International is the largest external shareholder with 7.1%, followed by TPG on 6.18%, according to a prospectus.

Launched in 2015, Dingdang describes itself as a pioneer in digital healthcare services in China. It is the third-largest player in the digital retail pharmacy space by revenue with a 1% market share in 2021. The industry leaders are understood to be JD Health and Alibaba Health, with 10% and 6.5%, respectively. JD Health raised USD 3.48bn through a Hong Kong IPO in 2020.

Dingdang’s drug express service, accessible through a mobile app and a WeChat mini program, relies on a network of 351 smart pharmacies across 17 cities. Delivery is guaranteed within 28 minutes of an order being placed. In addition to online direct sales, the company sells products to third-party online platforms and also distributes them to consumers via offline pharmacies.

Dingdang also offers online medical consultation, utilising 20 full-time and 72 part-time doctors, and over 800 third-party doctors, as well as chronic disease and healthcare management solutions such as dosage guidance, consultation reminders, and prescription renewal.

Last year, Dingdang fulfilled 60.5m medication orders through its online direct sales and offline channels, up from 40.5m in 2020. Health consultations rose from 4.4m to 6.8m. Three-quarters of people using the consultation service end up buying products through the drug express service.

Revenue came to CNY 3.68bn (USD 531.5m) in 2021, up from CNY 2.23bn the previous year. Online direct sales account for nearly three-quarters of revenue. Over the same period, the company’s net loss widened from CNY 273.9 million to from CNY 919.7m to CNY 1.58bn.

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• Topics
• Greater China
• IPO
• Healthcare
• China
• Hong Kong (China)
• TPG Capital
• China Merchants Capital
• Redview Capital
• OrbiMed
• Orchid Asia Group Management