China Resources Pharma Said to Raise $1.8 Billion From IPO

(Bloomberg) -- China Resources Pharmaceutical Group Ltd. raised $1.8 billion after pricing its Hong Kong initial public offering below the midpoint of a marketed range, according to people familiar with the matter.

The nation’s second-largest drugmaker priced its sale of 1.543 billion shares at HK$9.10 apiece, the people said, asking not to be identified as the information is private. State-backed China Resources Pharmaceutical offered the shares at HK$8.45 to HK$10.15 each, according to terms for the deal obtained by Bloomberg last week.

China Resources Pharmaceutical is completing the biggest drugmaker IPO globally since 2013, when Zoetis Inc. priced a $2.6 billion U.S. offering, according to data compiled by Bloomberg. The deal adds to the $19.5 billion raised from Hong Kong first-time share sales this year, down from $23.2 billion during the same period in 2015, the data show.

Demand for medicines in China is rising as its population ages and the incidence of cancer, heart disease and diabetes increases. That trend is helping to boost the businesses of local and international pharmaceutical companies in China, but they also face challenges as the government seeks to curb drug prices and manage health-care expenses.

State-Owned Conglomerate

Backed by the state-owned conglomerate China Resources Holdings Co., the company is one of the largest drug distributors in China. It manufactures Western pharmaceuticals, traditional Chinese medicine preparations and health supplements.

A Hong Kong-based external representative for China Resources Pharmaceutical declined to comment. IFR reported the final pricing earlier Friday in Hong Kong, citing unidentified people.

Eight cornerstone investors agreed to buy about $916 million of stock in the China Resources Pharmaceutical offering, according to last week’s deal terms. Guangdong Hengjian Investment Holding Co., owned by the government of the southern Chinese province, will invest $340 million, the terms show. 

Reckitt Benckiser Group Plc, the maker of Durex condoms, agreed to purchase $50 million of shares, while Fujifilm Corp. committed HK$820 million ($106 million). Such stock buyers agree to keep their holdings for six months in return for early, guaranteed allocation.

Bank of America Corp., CCB International Holdings Ltd., China International Capital Corp. and Goldman Sachs Group Inc. are joint sponsors of the offering, according to pre-listing documents filed with the Hong Kong stock exchange.

To contact the reporters on this story: Prudence Ho in Hong Kong at pho83@bloomberg.net, Crystal Tse in Hong Kong at ctse44@bloomberg.net. To contact the editors responsible for this story: Ben Scent at bscent@bloomberg.net, Anjali Cordeiro