PE-backed group submits sweetened offer for China’s iKang

It came shortly after iKang's management planned a rights issue, or "poison pill" strategy, intended to thwart industry rival Meinian's bid.

According to the latest filing, the Meinian's consortium is offering $23.50 per American Depository Share (ADS) - up from $22.00 - which values the company at about $1.54 billion. The improved offer price represents a 46.2% premium to the August 28 closing price, prior to the take-private bid being submitted by FountainVest Partners and iKang's management.

Ligang Zhang, the founder and CEO of iKang, and FountainVest offered $17.80 per share in late August. This was topped last month by a rival bid from Shenzhen-listed healthcare services provider Meinian Onehealth, which gave the US-listed counterpart an overall valuation of more than $1.5 billion.

The Meinian consortium also features Sequoia Capital, Cathay Capital Private Equity, Shenzhen Ping An Decheng Investment - a unit of Ping An Insurance - Taiping Guofa Capital and Huatai Ruilian Fund Management.

In response to the external bid, the iKang board had authorized the issuance of one right for each outstanding Class A and Class B common share earlier this month. A conversion of rights to shares can be triggered by the announcement of an individual or group acquiring at least 10% of the company's shares. An additional clause entitles rights holders to purchase shares in any acquirer that takes a 50% or more stake in iKang.

"We are optimistic about the potential of China's preventive health industry," said Yu Rong, CEO of Meinian, said in a statement. "We believe that there are huge untapped market opportunities, and that the sector has entered a phase of industry consolidation."

Set up in 2004, Beijing-based iKang provides medical examination services through 80 self-owned medical centers in 22 cities, as of November 2015. Outpatient services and dental treatment are also provided by a minority of these centers. Third-party service providers are used in 150 cities.

IKang raised $153 million in a US IPO in April last year, allowing NewQuest Capital Partners and GIC Private to make partial exits. Goldman Sachs, another PE backer, didn't sell any shares in the offering, while an investment vehicle controlled by China Investment Corporation (CIC), bought $40 million worth of shares, representing a 4.6% stake.

Shanghai-based Meinian, which was also founded in 2004, offers preventive healthcare check-up services and operates over 100 self-owned check-up centers in more than 50 Chinese cities. The company has received numerous PE investments in the last three years and in August it listed in Shenzhen through a reverse merger.

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• Topics
• Greater China
• Healthcare
• Buyouts
• China
• healthcare
• buyout
• Sequoia Capital
• Cathay Capital Private Equity
• Fountainvest Partners
• GIC Private