Alibaba, OTPP join founder-led consortium bidding for iKang
Alibaba Group and Ontario Teachers’ Pension Plan (OTPP) have joined a consortium led by the founder and CEO of iKang Healthcare Group that is involved in a competitive battle to privatize the US-listed company.
Ligang Zhang initially teamed up with FountainVest Partners last August to submit a bid of $17.80 per share for all outstanding American Depository Shares. The price represented a 10.8% premium to the previous close and valued iKang - which had listed just four months earlier - at around $1.2 billion.
The terms are unaltered in the latest filing, but the consortium has expanded to include China Life, Legend Capital, New China Capital International and LTW Capital Jaguar Investment as well as Alibaba and OTPP.
The move follows the submission of a rival bid from a consortium that features Meinian Onehealth, a direct competitor to iKang. That consortium, which also includes Sequoia Capital, Cathay Capital Private Equity, Shenzhen Ping An Decheng Investment, Taiping Guofa Capital and Huatai Ruilian Fund Management, offered $22.00 per share.
The management of iKang responded by announcing a rights issue, or "poison pill" strategy, to thwart the Meinian bid. The consortium countered with an improved offer of $23.50 per share.
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.
As of June 2015, Zhang held a 12.95% stake in iKang, while Boquan He, the company's vice chairman, had 13.23%. GIC Private owned 5.96%. However, Zhang has 34.5% of the total voting power.
IKang raised $153 million in a US IPO in April last year, allowing NewQuest Capital Partners and GIC 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.
The company reported revenue of $290.7 million in 2015, up from $202.3 million the previous year. It also generated a net profit of $26.8 million compared to losses of $6.1 million and $75 million in 2014 and 2013.
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