China's Hansoh Pharma secures GIC, Boyu Capital among investors for up to $1 billion HK IPO

HONG KONG (Reuters) - Chinese drugmaker Hansoh Pharmaceutical Group has secured nine cornerstone investors including Singapore’s GIC and China’s Boyu Capital for its up to $1 billion Hong Kong initial public offering (IPO), according to a term sheet seen by Reuters.

The Jiangsu-based drugmaker started book-building of its Hong Kong float on Thursday, in what would be the city’s second-largest IPO so far this year. It is selling about 551 million primary shares, or 9.7% of its enlarged share capital, at an indicative range of HK$13.06 to HK$14.26 ($1.66 to $1.82), the term sheet showed.

Hansoh has lined up a total of $344 million from nine cornerstone investors based on the top-end of the price range. Singapore’s sovereign wealth fund GIC Pte Ltd has made the biggest commitment of $70 million, followed by private equity firm Boyu, which is pledging $60 million, according to the term sheet.

Other cornerstones include Chinese investment firms Ally Bridge and Hillhouse Capital Group, Europe-based asset manager Prime Capital and U.S. healthcare investment firm OrbiMed.

If a 15% “greenshoe”, or over-allotment, option is exercised, that would bring the deal size to $1.15 billion, showed the term sheet.

Hansoh is set to fix the price of the deal on June 5 and trading of its shares is scheduled to start on June 14.

Hansoh declined to comment. Its cornerstone investors did not immediately respond to requests for comment.

Having topped the global charts for funds raised in IPOs in 2018, Hong Kong is currently lagging behind both the New York Stock Exchange and Nasdaq with $5.9 billion raised so far this year, Refinitiv data showed. That compared with $16 billion on the NYSE and $11 billion on Nasdaq.

The biggest listing in the Asian financial hub so far this year has been that of Chinese securities firm Shenwan Hongyuan HK Ltd which raised $1.2 billion in April.

Hansoh’s drug portfolio covers central nervous system diseases, oncology, anti-infectives, diabetes, and gastrointestinal and cardiovascular therapies, according to its prospectus filed with the Hong Kong stock exchange last month.

Those therapeutic areas accounted for 62.1% of total pharmaceutical sales in China in 2017 and grew faster than the Chinese pharmaceutical industry as a whole, the prospectus showed.

Hansoh made a net profit of 1.9 billion yuan ($274.88 million) on revenue of 7.7 billion yuan in 2018, an increase of 19% compared with the year earlier. The firm makes most of its revenue from oncology products, the prospectus showed.

The drugmaker plans to use IPO proceeds for research and development - including for existing and future domestic and overseas drug development - upgrading and building production lines and promotional purposes, it said in the prospectus.

Citigroup and Morgan Stanley are joint sponsors for the IPO.

Reporting by Julie Zhu; Editing by Christopher Cushing