Exits, IPO, Venture Capital

Venture-Backed BGI Genomics Completes $250M IPO On Shenzhen ChiNext

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The IPO ceremony held this morning on the Shenzhen Stock Exchange.

Chinese gene sequencing giant BGI Genomics Co., Ltd. today completed an initial public offering on the ChiNext board in Shenzhen, raising around RMB1.7 billion (US$250 million). The successful IPO comes after the company previously failed to list in the U.S. and Hong Kong, as well as an unsuccessful bit to achieve an A-share float via a reverse merger.

Today’s stock market debut could make company founder Wang Jian a billionaire, putting his net-worth at around RMB6.5 (US$960 million) to RMB11 billion (US$1.6 billion) based on the trading price range predicted by Chinese brokerage firms.

The Shenzhen-based company issued shares at RMB13.64 apiece, indicating a price-earning ratio of 22.99. But Chinese brokerage firms following the company are projecting an average PE ratio of between 60 to 80, which would give the stock a price range of between RMB62.4 and RMB85 per share. The high PE ratio is based on the trading range of other high-tech companies listed in Shenzhen.

The IPO means BGI Genomics’ numerous institutional investor backers, including Shenzhen Venture Capital Co., Ltd., Yunfeng Capital, State Development & Investment Corp. and Shenzhen Co-Win Venture Capital Investments Ltd., are one step closer to a successful and profitable exit.

Founded in the late 1990’s as a research center attached to Peking University, BGI Genomics has become one of the largest genetic testing companies in the world, with its businesses covering upstream sequencing and reagents, as well as genetic sequencing service solutions.

The company generates most of its income from fertilization and health services, basic research services, complex disease services and drugs research services. In 2016, fertilization and health services accounted for 54.62% of total income, or RMB929 million (US$134 million). China National Tobacco Corp., Meinian Onehealth Healthcare Holdings and the University of Oxford were some of its largest clients in 2016.

BGI Genomics recorded revenue of RMB1.7 billion, RMB1.3 billion and RMB1.1 billion in 2016, 2015 and 2014, respectively, while net profit stood at RMB350 million, RMB272 million and RMB58 million for those years, according to its IPO prospectus.

Company founder Wang Jian controls BGI Genomics via BGI Holdings, which owns 42.42% of BGI Genomics directly and indirectly. Wang Jian owns 85.30% of BGI Holdings, while Wang Jun, another co-founder who later established AI-powered precision health unicorn iCarbonX, owns 10.5% of BGI Holdings, according to the IPO prospectus.

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