Sequoia, Cathay join iKang take-private bid

Other consortium members include Shenzhen Ping An Decheng Investment, a unit of Ping An Insurance, Taiping Guofa Capital and Huatai Ruilian Fund Management, according to a statement. They are offering $22 per share for all outstanding American Depository Shares (ADS). This represents a 36.9% premium to the closing price on August 28, the last trading day before iKang received a take-private bid from FountainVest Partners and its founder.

The new offer, which gives iKang a valuation of more than $1.5 billion, is higher than the previous proposal. Ligang Zhang, founder and CEO of the company, and FountainVest previously offered to pay $17.8 per share at a valuation of $1.2 billion.

IKang raised $153 million in a US IPO in April last year, having raised capital from several PE investors. NewQuest Capital and GIC Private both made partial exits through the offering, while Goldman Sachs didn't sell any shares in the IPO. Best Investment Corporation, an investment vehicle controlled by China Investment Corporation (CIC), bought $40 million worth of shares, representing a 4.6% stake.

Set up in 2004, Beijing-based iKang provides medical examination services across a network of 77 medical centers. It served 1.7 million employees from 11,200 corporate customers in 2012 plus a further 206,000 individual customers. It claims to hold a 13.6% market share of China's private preventative healthcare services market.

The company reported a net loss of $75 million for the year ended March 2013, compared to a profit of $4.6 million in 2012. Revenue jumped from $93.7 million to $133.9 million over the same period. In the quarter ended June this year, revenue was up 43.4% year-on-year at $60.2 million, while net profit reached $10.7 million, a gain of 448% on the same period last year.

Shanghai-based Meinian, which was also founded in 2004, offers preventive healthcare check-up services, including general medical examinations, disease screening and services such as doctor referrals and traditional Chinese medical services to individual and corporate customers. It operates over 100 self-owned check-up centers in more than 50 Chinese cities.

The Carlyle Group took a 13.5% stake in Meinian in 2012 via Beijing Carlyle Investment Center, its joint venture reminbi fund with the Beijing municipal government. In 2013, the health checkup firm raised RMB300 million ($39 million) from Carlyle, Ping An Insurance and Cathay Capital. Then in December last year, ChinaEquity and GGV Capital's renminbi fund committed RMB76 million to Meinian, while Huatai Zijin Investment provided another RMB100 million two months after.

Meinian has made several investments to scale up the business. In 2012, it acquired Shenzhen Regular Hospital Management Investment, a Guangdong-based medical clinics operator. Earlier this year, it invested in industry rival Ciming Health Checkup Management Group. Ciming won approval to list in Shenzhen in 2013 but an IPO has yet to materialize.

In August, Meinian listed in Shenzhen through a reverse merger with shell company Jiangsu Sanyou Group.

The new take-private proposal led by Meinian is subject to shareholder and regulatory approvals.

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• Topics
• Greater China
• Buyouts
• Healthcare
• China
• buyout
• healthcare
• Cathay Capital Private Equity
• Sequoia Capital
• Ping An