December 13, 2017 / 10:04 AM / 2 years ago

Tencent-backed We Doctor seeks overseas expansion as it prepares for Hong Kong IPO

HONG KONG (Reuters) - We Doctor Group, a Tencent Holdings-backed online healthcare services firm, said it is in talks with Hong Kong and Southeast Asian hospital chains and medical groups about tie-ups to cater to growing demand from mainland Chinese for international-standard services.

The Hangzhou-based firm hopes to see some partnerships finalised in the next six to 12 months, Chief Strategy Officer Jeff Chen told Reuters in an interview.

We Doctor has more than 150 million registered users in China for its online appointment booking, prescription and diagnosis services. Joining hands with overseas hospitals and medical groups would help burnish its allure ahead of a planned IPO in Hong Kong in the second half of 2018.

For the time being, it is seeking $500 million in fresh funding - a capital raising that would value the company at more than $5 billion and which is expected to close in the first quarter of next year.

“Previously, most Chinese patients didn’t have much access to international healthcare resources,” Chen said.

“But now, if they prefer to go overseas, we would be able to refer them to one of the top-end hospitals and provide a whole package of services,” he said, citing services such as securing appointments, booking flights and hotels.

In addition to Tencent, its biggest backer, We Doctor also counts Fosun International (0656.HK), Goldman Sachs and Hillhouse Capital Group among its investors.

We Doctor declined to comment on the size of investors’ holdings.

Fueled by a growing middle class and an ageing population, China’s healthcare market is growing rapidly. The country’s healthcare spending is set to hit $1 trillion by 2020, up from $357 billion in 2011, according to McKinsey & Co.

An overstretched public healthcare system and a lack of doctors is creating demand for premium services - attracting both domestic and foreign medical firms.

We Doctor’s listing plans come amid a strong pipeline of Chinese tech-related companies considering public floats in the city in 2018, including We Doctor rival Ping An Good Doctor, and Lufax, a wealth management platform. Both of them are backed by Ping An Insurance Group (2318.HK).

Some Tencent-backed firms have seen robust demand this year. Shares in its e-book unit China Literature Ltd (0772.HK) surged more than 80 percent in their debut in early November, showing that Hong Kong had raised its game as an IPO destination for Chinese tech firms that more often preferred a U.S. listing.

Chen said Hong Kong made more sense as a venue for We Doctor as the firm was responsible for a lot of Chinese patient medical data.

We Doctor is not yet profitable. Chen said he expected it to break even and turn a slight profit in the next three months.

Reporting by Julie Zhu; Editing by Edwina Gibbs

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