Caixin
May 10, 2019 07:27 PM
BUSINESS & TECH

Genome Sequencing Giant BGI's Fundraising Flops

Technicians work in a gene testing laboratory built by BGI in Kunming, Yunnan province on Dec. 26. Photo: VCG
Technicians work in a gene testing laboratory built by BGI in Kunming, Yunnan province on Dec. 26. Photo: VCG

Chinese genomics giant BGI Group has secured $200 million in fundraising for its gene-sequencing equipment unit, one-fifth of the expected amount owing to investors’ concerns about sluggish sales of its DNA-sequencing machines, market observers said.

MGI Tech Co. Ltd., a wholly owned subsidiary of BGI, announced Thursday it obtained the funding from investors including Citic Goldstone Fund Management, Orient Securities Capital Investment and Green Pine Capital Partners. MGI didn’t disclose its valuation.

MGI was expected to raise as much as $1 billion or dispose of a 20% stake for funds ahead of a planned initial public offering (IPO), several private fund sources told Caixin earlier.

One source told Caixin this week that most of MGI’s clients have either been BGI’s affiliates or third-party gene companies backed by BGI. Those companies are contractually required to buy its DNA-sequencing machines. The source asked not to be identified as the information is private.

"BGI Genomics Co. Ltd., the listed arm of BGI Group, purchased 470 million yuan ($69 million) in assets from MGI Tech last year, including DNA sequencers, components and maintenance fees, according to a document released March by BGI's IPO sponsor, Citic Securities."

“BGI is selling the products in its internal side, while the market hasn’t recognized its products yet,” said another private fund source who asked to remain anonymous.

MGI Tech said it has 1,100 gene sequencing machines installed globally, commanding a 30% share in China. The sales, however, lagged far behind its larger international rival, U.S.-based Illumina Inc., which boasted 11,000 gene sequencing machines installed across the globe as of the end of 2018.

In addition, a slew of latecomers to the Chinese market are racing to shave market share off of BGI, which is China’s largest genomics company.

Direct Genomics rolled out its third generation DNA sequencer GenoCare in 2017, which was developed by a research team lead by controversial researcher He Jiankui.

Contact reporter Tang Ziyi (ziyitang@caixin.com)

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