Kangji Medical investor sees more health care start-ups opting for a HK listing

01-Jul-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

Zhejiang province-based surgical instrument maker Kangji Medical surged 99 per cent on its Hong Kong debut on Monday, a sign other health care providers may follow in its footsteps said one of its investors who is cashing out of the sector at a rapid pace.

Kangji Medical’s initial public offering, which launched earlier this month, was over 900-time subscribed in Hong Kong, diluting investor Lyfe Capital’s shareholding to a 6.1 per cent, from 17.4 per cent.

Hong Kong is shaping up as an attractive fundraising hub for Chinese health care and life science start-ups that could eventually rival US exchange Nasdaq, said Lyfe Capital’s founding partner James Zhao.

“We have seen over the past two years how the Hong Kong stock exchange has made a lot of effort, paving the way for companies in the Chinese health care sector to list in Hong Kong,” said Zhao, who splits his time between his fund’s offices in Shanghai, Hong Kong and Menlo Park, California.

Zhao said for the two months of June and July, Lyfe Capital, which has $1.27 billion in assets under management, will have cashed out from five portfolio companies through IPOs, its busiest two months since the fund was formed in 2015.

Two other Lyfe Capital portfolio companies, in-vitro diagnostic products maker Beijing Succeeder Technology, and Chengdu Easton Biopharmaceuticals, have already won the approval to list on the Science and Technology Innovation Board in Shanghai next month. Two others were listed on Nasdaq in June.

A total of 10 start-ups backed by Lyfe Capital have listed in either the US, Hong Kong, and China. Lyfe Capital manages three US dollar funds.

As both the stock exchanges in Hong Kong and Shanghai have in recent years introduced more start-up-friendly reforms, Zhao said more managers in his portfolio companies are considering a listing in either a Hong Kong or China, rather than the US.

Both exchanges now allow for pre-profit biotech companies to seek a listing that has made both markets an attractive fundraising venue for start-ups in general, he said. For the first half this year, four loss-making biotech start-ups listed in Hong Kong, according to Deloitte, which does not include profitable Kangji Medical.

Kangji Medical’s debut comes amid a slew of other biotech and medical-related IPOs that have also launched their offerings. These include China’s private hospitals operator, Honliv Health Care Management, which is seeking to raise up to HK$345 million; and Shenzhen Hepalink Pharmaceutical Group, which is raising up to HK$4.53 billion.

Whether biotech companies choose to list on Chinese domestic stock markets or Hong Kong, could sway the global IPO rankings this year as the Hong Kong stock exchange is locked in a tight race with its Shanghai counterpart.

For the first half of this year the Hong Kong stock exchange raised $11.18 billion from 54 IPOs, up 23 per cent from a year ago; but the number of deals fell 19 per cent. This is still behind the second-ranking Shanghai Stock Exchange, which raised $13.59 billion from 77 IPOs. The US exchange Nasdaq topped the global ranking, raising $15.65 billion from 48 IPOs, data from Refinitiv shows.



Category: Hong Kong

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