UPDATE 1-China's Luye Pharma seeks up to $761 mln in HK relisting

Sun Jun 22, 2014 10:17pm EDT

(Adds background on previous listing, names of banks running the deal)

HONG KONG, June 23 (Reuters) - Three Chinese private funds are seeking up to HK$5.9 billion ($761.14 million) for the Hong Kong initial public offering of China's Luye Pharma Group Ltd, a source with direct knowledge of the matter told Reuters on Monday.

The deal sees the re-listing of the Chinese drugmaker, in which CDH Capital, Citic Private Equity and New Horizon Capital bought a majority stake in 2012. The company was at that time majority-owned by Korean fund MBK Partners and listed on the Singapore Stock Exchange.

Private equity firms have been involved since 2010 in over 30 attempted delistings of China firms listed in the United States and Singapore, according to Thomson Reuters data.

Those firms' stocks are undervalued by investors, their management and owners believe, and have been hit by wider concerns about fraud.[link: reut.rs/1lK66jx]

Luye Pharma is the first of a wave of those "China orphans" deals from 2012 to attempt relisting, and will provide a test of the theory that relisting closer to their home markets will provide an increase in value through a listing arbitrage.

The deal will see the shares priced at HK$5.38 to HK$5.92 each, the source said, declining to be identified because the matter is not yet public. The deal is set to price on July 3rd.

Citigroup Inc, UBS AG and Citic Securities Co Ltd are managing the share sale, the source said.

Luye Pharma Group could not be reached for comment.

($1 = 7.7515 Hong Kong Dollars) (Reporting by Lawrence White and Stephen Aldred; Editing by Stephen Coates)

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