CICC funds exit China TCM business as rival agrees $1.3b buyout

China TCM will acquire an 81.48% interest in Jiangyin Tianjin through three transactions, the Hong Kong-listed company said in a regulatory filing. The total consideration values the target company at 15 times its 2014 net operating profit.

CICC Jiatai Equity Investment Fund, a RMB5 billion vehicle that reached a final close in September 2012, holds a 19.71% stake in Jiangyin Tianjiang. According to AVCJ Research, it paid RMB613.2 million for the interest in September 2011. A further 12.63% is owned by CICC Jiatan Equity Investment Partnership. The two fund will sell their stakes to China Traditional for up to RMB3.33 billion.

Another financial investor, Wuxi Guolian Zhuocheng Venture Capital, has a 1.14% interest. This will be exited alongside stakes owned by two Shanghai-listed companies - Shanghai Jiahua United and Guangdong Keda Clean Energy - and Dengping Tan, a director of Jiangyin Tianjiang. China TCM will pay up to RMB4.13 billion for a 40.52% holding.

The remaining transaction will see Jialin Zhou, chairman and founder of Jiangyin Tianjiang, sell her 8.62% stake for up to RMB878.7 million.

Founded in 1992, Jiangyin Tianjiang is China's largest producer of Traditional Chinese Medicine (TCM) granules. These are extracts of medicinal herbs created through the use of modern extraction and concentration technologies.

Granule sales grew from RMB228 million in 2006 to RMB4.2 billion in 2013. The market is expected to be worth RMB18.8 billion by 2018. Jiangyin Tianjiang and its subsidiary, GD Yifang, are two of only six companies in China approved to manufacture concentrated TCM granules. Their joint market share in revenue terms was over 50% in 2013. The distribution network covers more than 5,000 hospitals.

Jiangyin Tianjiang generated sales revenue of RMB2.51 billion in 2013, up from RMB1.89 billion the previous year, while net profit rose from RMB418 million to RMB545.5 million over the same period.

China TCM develops and distributes TCM treatments. In 2013, a Hong Kong subsidiary of state-owned China National Pharmaceutical Group Corporation acquired a majority interest in the company. This was followed by the purchase of industry rival Tongjitang and China TCM expects the M&A drive to continue.

The company has 332 products and 526 product specifications in its portfolio, of which 68 are national exclusive products. Turnover increased 35.2% year-on-year in 2013 to RMB1.39 billion while net profit jumped 17.8% to RMB198.5 million.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Exits
• Healthcare
• Greater China
• Trade sale
• China
• Exit
• healthcare
• CICC