Hangzhou Tigermed Consulting, a mainland clinical research service provider, is seeking a secondary listing in Hong Kong to raise around US$500 million (HK$3.9 billion) to US$1 billion.
The Shenzhen-listed company has filed an initial public offering application to Hong Kong stock exchange late last month.
It has picked Merrill Lynch Far East, Haitong International Capital, CLSA Capital Markets, and China International Capital Corporation Hong Kong Securities as joint sponsors of the deal.
Tigermed is the largest clinical contract research organization (CRO) in mainland China by revenue in 2019 with a market share of 8.4 percent, according to a commissioned Frost & Sullivan report. It is also among the top 10 clinical CROs globally, the report says.
The Hangzhou-based company is offering clinical trial solutions and clinical-related and laboratory services, mostly covering pre-clinical research to post-approval studies for drugs and medical devices. Its laboratory services and bioequivalence studies are provided through subsidiary Frontage Holdings (1521), which was spun off a year ago.
Tigermed's major domestic rivals, including WuXi AppTec (2359) and Pharmaron Beijing (3759), have finished dual listing in Hong Kong and mainland China in the past 18 months. The two companies have presented strong growth momentum despite a capital market crash, with more than 23 percent share price increases in Hong Kong year-to-date, as investors have been betting on the Chinese developing biotech industry when the coronavirus outbreak threw light on the flaws in the country's healthcare system.
Tigermed has been favored by institutional investors. Its shares have more than doubled in Shenzhen since Singapore state investor Temasek and private equity firm Hillhouse Capital acquired around 10 million shares from Ye Xiaoping, chairman and controlling shareholder of the company, for 551.5 million yuan (HK$603.45 million) in June 2018. Its shares gained by more than 30 percent so far this year.
The company is planning to expand its global presence. It has 15 overseas sites across 11 countries and regions in the Asia Pacific, North America and Europe, aiming to capture the growing demand of Chinese customers expanding overseas, as well as multi-regional research and development projects.
In 2019, the company provided services to 1,898 customers worldwide, including all of the top 20 global pharmaceutical companies and the top 10 Chinese pharmaceutical companies by revenues, according to Frost & Sullivan. The contracted future revenue for its services was about 5.01 billion yuan as of December 31, 2019.
However, the pandemic may slow the Tigermed's expansion plan as its major ongoing projects have been delayed.
The company's medical staff and facility resources have been reduced because hospitals and other clinical sites in mainland China and overseas, especially in the United States and Korea where the firm has material operations, have devoted plenty of medical resources to fight against the deathly disease.
Meanwhile, potential patient candidates have become less willing to participate in clinical trials due to fears of potential infection at clinical sites.
Tigermed says none of its projects had been canceled due to the pandemic, but it is difficult to predict whether it may experience any material decline in customer orders or disruption and delay in projects in the future.
Net profit is expected to rise between 58 percent and 88 percent to around 229.9 million yuan to 273.6 million yuan in the first quarter, driven by non-recurring profit.
Tigermed plans to use the net proceeds from the floatation to expand and improve operational capacity, and fund potential acquisitions of overseas clinical CROs and other related businesses. A part of the net proceeds will be used to invest and incubate innovative companies in the healthcare industry, repay outstanding borrowings, and develop advanced technologies.
