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Exits, Private Equity

PE-Backed WuXi Biologics’ $510M Hong Kong IPO Cheered By Investors

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WuXi Biologics (Cayman) Inc., a Chinese contract drug manufacturer whose parent company is controlled by a group of leading private equity firms, has seen its share price soar after completing a HK$3.98 billion (US$510 million) initial public offering on the Kong Exchange Stock Exchange.

The company issued 192 million new shares at the price of HK$20.6 (US$2.6) per share. Its share price increased 37% in its trading debut on Tuesday.

Originally established in 2008 as one of WuXi AppTech’s business units, WuXi Biologics provides services including new drug discovery, biologics testing, drug product formulation and filling, as well as providing technology platforms for the discovery of antibody-based therapeutics.

WuXi AppTech is the operating subsidiaries of formerly New York Stock Exchange-listed WuXi PharmaTech, which was taken private in 2015 by a group of investors including Ally Bridge Group, Boyu Capital, Ping An Insurance (Group) Co. of China, Singapore’s Temasek Holdings and Hillhouse Capital, as well as WuXi PharmaTech’s chairman and chief executive Ge Li and other executives.

The IPO of WuXi Biologics is the investor group’s first step toward relisting the business in Mainland China at a more favorable valuation, as was their stated intent when taking the company private.

The private equity firms hold a combined 60.69% stake in WuXi Biologics’ parent company. Boyu Capital owns 27.3%, Temasek has 10.29%, Ally Bridge holds 9.36%, while Ping An Insurance and Hillhouse own 8.38% and 7.93%, respectively. Yunfeng Capital, Sequoia Capital and Legend Capital each hold 1.56%.

After issuing the new shares, WuXi Biologics’ parent company will hold a 75% stake in the company, which recorded revenue of RMB989 million (US$145 million) in 2016, up 77% year-on-year, while its net profit increased 220% year-on-year to RMB141 million (US$20 million).

WuXi Biologics plans to use the proceeds from the IPO to pay all its outstanding loans, to construct new facilities, as well as for working capital.

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