* Poor demand from retail investors weighed on deal - analyst
* Fosun to use half of listing proceeds for acquisitions
* Deal is Hong Kong's largest public offering in three months
* Shares set to debut in Hong Kong on Oct. 30 (Adds analyst comments, pharmaceutical M&A, Fosun's Shanghai shares)
By Elzio Barreto
HONG KONG, Oct 24 (Reuters) - Shanghai Fosun Pharmaceutical (Group) Co Ltd priced Hong Kong's largest public offering in three months at the bottom of the range on Wednesday to raise about $512 million, a further sign of tough times for new listings.
The pricing was hurt by poor demand from retail investors, one analyst said, a warning for other deals lining up in Hong Kong in coming months.
These include an up to $6 billion Shanghai-Hong Kong IPO of People's Insurance Company of China Group (PICC) and an $800 million offer of billionaire Li Ka-shing's extended stay hotel business.
"The upcoming listings are not so attractive because there are already cheaper deals in the (secondary) market," said Jasper Chan, corporate finance officer at brokerage Phillip Securities in Hong Kong. "The market is not quite so stable."
Fosun Pharmaceutical, a unit of one of China's largest conglomerates Fosun International, whose main shareholder is billionaire Guo Guangchang, is already listed in Shanghai.
The firm, which gets about two-thirds of its revenue from pharmaceutical manufacturing, plans to use about half of the proceeds for domestic and international acquisitions, setting aside about $250 million to spend in a sector which bankers say is ripe for deal making.
China currently spends 5.7 percent of its gross domestic product on healthcare, much lower than the world average of 12.3 percent, Standard & Poor's Capital IQ said in a report.
Recognising the under investment, China launched a three-year health care reform in 2009 and the government is committed to raising investment in the sector.
Government policies and demographic trends hint at an increased focus on acquisitions in healthcare, and cashed-up Chinese medical equipment companies could pursue domestic and international transactions, the report added.
Hong Kong led the world in IPO issuance in 2009 and 2010, but new stock offerings have dwindled and are down by more than 80 percent so far this year.
Most deals in 2012 have been so-called block offerings, which target a select number of institutional investors and seek to bypass volatile demand from retail investors.
Fosun Pharmaceutical secured $75 million in cornerstone investments -- $50 million from U.S. insurer Prudential Financial and $25 million from the World Bank's private investment arm, International Finance Corp (IFC) -- for its Hong Kong offer.
It sold all 336.1 million shares on offer for HK$11.80 each, putting the total deal value at HK$3.97 billion ($512 million), according to a term sheet seen by Reuters. The deal was marketed in a range of HK$11.80-13.68 per share.
"The demand was not good in the retail tranche and this caused them to price at the bottom," said Chan.
The offer is the biggest in Hong Kong since mining company Inner Mongolia Yitai Coal Co Ltd raised about $900 million in July.
Fosun Pharmaceutical's Shanghai shares rose 1.4 percent, compared with a 0.2 percent gain in the Shanghai Composite Index. The stock has jumped 22 percent in 2012, but is down about 4 percent since the company started meeting with investors to pitch the Hong Kong deal.
The company, which has forecast a profit of at least 1.49 billion yuan in 2012 from 1.17 billion yuan in 2011, is slated to debut in Hong Kong on Oct. 30.
China International Capital Corp (CICC), Deutsche Bank , JPMorgan and UBS managed the offering. ($1 = 7.7502 Hong Kong dollars) ($1 = 6.2480 Chinese yuan) (Additional reporting by Denny Thomas; Editing by Richard Pullin)