Hony in $1.26b CSPC Pharma share sale

Three subsidiaries of Massive Top, the company through which Hony controlled CSPC, offloaded approximately 1.37 billion shares at HK$7.15 apiece, according to a regulatory filing. This 23.16% stake is the entire interest held by the private equity firm's third fund.

The price represents a 4.4% discount to the previous close. As of late morning trading, CSPC's stock had climbed 11.6% to HK$8.35. The company's shares are up 24% year-to-date, having gained more than 27% since the start of April as the Hong Kong market has rocketed.

Hony bought China Shijiazhuang Pharmaceutical Group from the State-owned Assets Supervision and Administration Commission of the Shijiazhuang municipal government for RMB870 million ($140 million) in 2007. It also indirectly owned a 59.03% stake in Hong Kong subsidiary China Pharmaceutical Group. The state-owned enterprise was restructured and the listed entity was renamed CSPC Pharmaceutical.

According to the company's 2013 annual report, Hony owned March Rise which in turn held a 75% stake in Massive Top. Two subsidiaries of Massive Top, Joyful Horizon and Massive Giant, held the bulk of a 78.48% interest in CSPC.

Over the last two years subsidiaries of Massive Top have been involved in several share sales, although it is unclear how many of these resulted in partial exits for Hony.

There are filings for a HK$1.19 billion sale in April 2013, a HK$2.02 billion sale in October 2013, a HK$4.41 billion sale in May 2014, a HK$4.01 billion sale in August 2014, and a HK$3.14 billion sale in October 2014. In two cases shares moved to True Ally Holdings, a vehicle controlled by Dongchen Cai, chairman of CSPC.

The most recent sale saw Massive Top's stake in CSPC fall from 41.07% to 17.91%. Now that Hony has fully exited, control of March Rise will transferred so that 40% is held by True Ally and 60% by a China-based structure owned by Cai and senior management.

Located in Shijiazhuang, CSPC produces blockbuster drugs used for treating cardiovascular and cerebrovascular conditions, as well as antibiotics and vitamin products. The company posted revenues of HK$9.94 billion in 2013, up from HK$4.15 billion the previous year, while net profit slipped from HK$2.17 billion to HK$989.3 million.

For the first six months of 2014, revenue and net profit came to HK$5.34 billion and HK$600.7 million, year-on-year increases of 5.3% and 16.6%, respectively.

Hony Capital Fund III closed at $580 million in 2006. The private equity firm is now investing its $2.36 billion fifth fund.

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• Topics
• Exits
• Greater China
• Healthcare
• Hony Capital
• China
• healthcare
• Exit
• Sell down