Parent Sells Stake in WuXi Biologics for Third Time in Less Than Year
Chinese biotech firm WuXi Biologics (Cayman) Inc.’s controlling shareholder, WuXi Biologics Holdings Ltd., has announced that it will sell 50 million shares of its subsidiary for HK$79.2 ($10.09) per share, with the goal of generating as much as HK$3.96 billion.
Once completed, the sale will reduce WuXi Biologics Holdings’ stake in the Hong Kong-listed company from 59.43% to 55.34%. Wuxi Biologics Holdings’ major shareholders include company founder Li Ge, Boyu Capital Consultancy Co. Ltd., Hillhouse Capital Management Ltd., Yunfeng Capital, Sequoia Capital and Pavilion Capital Pte. Ltd., a unit of Temasek Holdings Private Ltd., the national wealth fund of Singapore.
The deal will be the third major share sale of WuXi Biologics in less than a year. On March 22, Li cashed out HK$700 million in WuXi Biologics stock. In December, the parent WuXi Biologics Holdings sold 126 million shares of the subsidiary, cashing out HK$5.07 billion. Li personally stands to gain HK$2.7 billion from the three share sales.
Li is the founder and actual controller of WuXi Biologics, Wuxi AppTech Inc. and Shanghai SynTheAll Pharmaceutical Co. Ltd.
Known in the industry as a biological medicine contract development and manufacturing organization, WuXi Biologics doesn’t research or develop drugs, but rather provides big pharmaceutical companies with pre-clinical services such as drug toxicology tests. In 2017, the Chinese biotech company’s annual net profit rose 79% to 253 million yuan ($39.1 million) on 1.62 billion yuan in revenue, which rose 77.55%.
WuXi Biologics is active globally. It generates more than half of its revenue in the U.S. On May 9, the company announced that it will invest $384 million to build a plant in Ireland. Several days later, it announced that it will build a facility in Singapore. In June, it said it will spend $60 million to establish another facility in Boston.
WuXi Biologics has been one of the best-performing stocks on the Hong Kong Stock Exchange over the last year. Since its initial public offering in June 2017, its market capitalization has tripled to more than HK$100 billion.
The company is one of three listed subsidiaries spun off from WuXi PharmaTech, which delisted from the New York Stock Exchange in 2015. At the time, its privatization market valuation was $3.3 billion. The total market valuation of the three subsidiaries now is $30.77 billion.
WuXi Biologics’ stock is trading about 300 times past earnings. By comparison, companies trading in Hong Kong have an average price-to-earnings ratio of 12.
WuXi PharmaTech delisted from the New York Stock Exchange because of a lack of investor enthusiasm about the stock, and the company couldn’t raise sufficient money to support an expansion into the biologics medicine field.
Contact reporter Bonnie Wang (firstname.lastname@example.org)
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