Partial exit for PE investors as Luye Pharma raises $764m

The company sold 999.6 million shares - of which 332.1 million were existing shares - at HK$5.92 apiece, the high end of the indicative range. Six cornerstone investors - Dragon Billion China Master Fund, Macquarie Funds Management, Minmetals Capital, OrbiMed Advisors, TAL China Focus Master Fund and Value Partners - agreed to cover approximately $280 million of the offering.

CDH sold 78.1 million shares in the offering, while China Private Equity offloaded 82.6 million and New Horizon and GIC exited 66.1 million and 72.1 million, respectively. This implies cumulative proceeds of HK$1.76 billion for the four investors, although this could rise to as much as HK$2.35 billion if the overallotment option is fully exercised.

Post-offering, CDH will own 6.4% of Luye, with CITIC PE, New Horizon and GIC owning 6.8%, 5.4% and 5.9%, respectively, according to a regulatory filing. The controlling shareholder remains Dianbo Liu, Luye Pharma's CEO, executive chairman and co-founder, with 45.5%.

Luye was set up in 1994 and is headquartered in Shanghai. The company is a major specialty pharmaceutical company focusing on drug-delivery systems in China, employing more than 3,000 staff. It develops and sells patented prescription medicines in various fields, including oncology, orthopedics and neurology. The proceeds of the IPO have been earmarked for acquisitions, R&D and increasing production capacity.

The company listed in Singapore in 2004 and was taken private by Liu in conjunction with the PE investors in 2012. The privatization saw North Asia-focused buyout firm MBK Partners - which invested in Luye in 2008 - exit its entire holding in the company. The transaction was financed through exchangeable bonds worth $248.7 million and shares issued to the buyer consortium, plus an $80 million term loan from CITIC Bank International.

Luye reported a net profit of RMB327.9 million ($52.8 million) for 2013, up from RMB175.6 million in 2012. Revenues increased from RMB2.14 billion to RMB2.52 billion over the 12-month period. Just over one third of Luye's revenue is generated by sales of Lipusu, China's second best-selling cancer treatment in 2013. Two cardiovascular drugs - Xuezhikang, which reduces cholesterol, and Maitongna, which is used to treat brain swelling caused by trauma or surgery - account for a further 27%.

The IPO was managed by UBS, Citi and CLSA.

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• Topics
• Exits
• Healthcare
• Greater China
• healthcare
• IPO
• Exit
• China
• CDH Investments Management
• New Horizon Capital
• Citic Private Equity
• GIC Private