June 5, 2019 / 3:17 PM / 4 months ago

UPDATE 1-Hansoh Pharma raises $1 bln in HK IPO priced at top of range-sources

* Shares were being sold in indicative band of HK$13.06-HK$14.26

* Hansoh due to start trading in Hong Kong on June 14

* Company plans to use IPO proceeds for research & development (Adds company financials, Hong Kong market details)

By Julie Zhu

HONG KONG, June 5 (Reuters) - Drugmaker Hansoh Pharmaceutical Group on Wednesday priced its Hong Kong initial public offering at the top end of its targeted range, two people with direct knowledge of the matter said, raising roughly $1 billion.

The Jiangsu-based drugmaker sold around 551 million new shares at HK$14.26 ($1.82) each - the top end of an indicative range of HK$13.06 ($1.67) to HK$14.26 a share, the people said, making it one of Hong Kong’s largest flotations this year.

The pricing values the company at $10.3 billion and represents a multiple of 27.5 times its estimated 2019 earnings, one of the people said.

Hansoh’s shares are due to start trading on June 14.

The company declined to comment. The people did not want to be named as they were not authorized to speak on the matter.

The pricing comes at a delicate time for the Hong Kong market, which is lagging U.S. exchanges this year in terms of capital-raising via IPOs with a total of just $5.9 billion as of May, compared with the combined $26.9 billion raised by Nasdaq and the New York Stock Exchange, according to Refinitiv data.

Chinese securities firm Shenwan Hongyuan HK Ltd’s $1.2 billion IPO in April is the biggest listing in Hong Kong so far this year.

Ahead of the public offering, Hansoh secured a total of $344 million from nine cornerstone investors including Singapore’s sovereign wealth fund GIC and Chinese private equity firm Boyu Capital.

Hansoh’s drug portfolio covers central nervous system diseases, oncology, anti-infectives, diabetes, and gastrointestinal and cardiovascular therapies, according to its prospectus.

Those therapeutic areas accounted for 62.5% of total pharmaceutical sales in China in 2018, according to the prospectus.

Hansoh made a net profit of 1.9 billion yuan ($275 million) in 2018, up 19% percent year on year, on revenue of 7.7 billion yuan. The firm makes almost half of its revenue from oncology products, its prospectus showed.

The company plans to use the IPO proceeds for research and development, developing production lines, and promotional purposes.

Citigroup and Morgan Stanley are joint sponsors for the IPO.

$1 = 7.8396 Hong Kong dollars Reporting by Julie Zhu; Editing by Jane Merriman and Mark Potter

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