CITIC PE-backed 3SBio IPO raises $711m in Hong Kong IPO
CITIC Private Equity has made a partial exit from Chinese biotech player 3SBio as the company raised HK$5.51 billion ($711 million), two years after leaving NASDAQ in a take-private deal.
A total of 606.1 million shares were sold at HK$9.10 apiece, the top end of the indicative range. This included 121.2 million shares owned by CITIC PE, according to a filing. The private equity firm has taken HK$1.1 billion off the table and retains a 29.38% interest in the business, although this could change if underwriters exercise the overallotment option.
Based on the offering price, 3SBio is worth approximately HK$24.5 billion. This implies a more than seven-fold gain - most of it on paper - for CITIC PE on its original investment.
GIC Private and BlackRock are two of six groups that participated as cornerstone investors in the offering, committing $150 million between them. The GIC and BlackRock contributions were $30 million and $40 million, respectively.
A consortium led by 3SBio's CEO and CITIC PE completed a $370 million privatization in June 2013, backed by a combination of debt, rollover equity and fresh equity. The PE firm - acting through CPE China Fund, a $990 million vehicle that closed in 2011 - subscribed to a convertible note issued by 3SBio worth $154.4 million, while China CITIC Bank International provided a $100 million term loan.
Later that year, CITIC PE assigned a $6 million portion of the note to China-focused life sciences investor Decheng Capital. The GP participated through its $125 million Decheng Capital China Life Sciences USD Fund I.
3SBio will use the majority of the proceeds from the offering to expand its portfolio through selective acquisitions, according to its prospectus. The company also plans to strengthen its sales and marketing efforts, build new production lines, and fund research and development projects.
3SBio develops a range of pharmaceutical products for the China market, with a particular focus on cancer and kidney conditions. Its two core products, Tpiao and Epiao, are used to treat bleeding conditions arising from chemotherapy treatment. The company has a further 20 products in its development pipeline.
Revenue for 2014 came in at RMB1.13 billion ($182 million), up from RMB875.4 million the previous year. Net profit increased from RMB96.1 million to RMB291.7 million over the same period.
CITIC PE recently closed its second US dollar-denominated fund at $1.3 billion. The private equity firm also operates three renminbi funds.
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