Hygeia Healthcare is seeking to raise US$300 million to US$400 million prior to a listing in Hong Kong, as the Shanghai-based radiotherapy service provider joins a flurry of IPOs launched by companies in the medical sector riding on strong demand from investors.
The company, in which private equity firm Warburg Pincus owns a 17.2 per cent stake through an affiliate company, operates a network of 10 oncology hospitals in six provinces in China, providing over 2,000 beds, according to a listing document posted on the Hong Kong stock exchange website on Monday. The document was heavily redacted because the terms of the deal are still being negotiated.
Morgan Stanley and Haitong International Securities are joint sponsors for the deal. Neither was immediately available for comment.
Hygeia Healthcare claims to be China’s largest oncology health care group in terms of revenue generated from radiotherapy-related services last year. In 2019, it recorded more than 940,000 patient visits among its network of hospitals; up 24 per cent from a year ago. It provides radiotherapy services to 15 hospital partners in nine provinces. Incidences of cancer in China are expected to grow to about 5.1 million by 2025, up from about 4.4 million last year, which is the highest in the world, according to a projection by consultant Frost & Sullivan quoted in the document.
Apart from Warburg Pincus, Citic Capital Holdings was also listed as a substantial shareholder with a 5.2 per cent stake held through its affiliate company.
Hygeia’s planned flotation comes amid a resurgence of investors’ demand for IPOs, especially for health-care related issuers. The recent IPO of Peijia Medical, a medical device maker based in Jiangsu province which debuted on Hong Kong’s main board on May 15, was more than a thousand times oversubscribed.
Over the weekend, two other Chinese health care companies also posted their redacted listing documents on the Hong Kong stock exchange website. These include Kangji Medical, a provider of minimally invasive surgical instruments, and Immunotech Biopharm, an immunotherapy biopharmaceutical company.
“We have seen strong interest from institutional investors for health care related IPOs both in the Hong Kong and mainland markets,” a source said.
In the first five months of the year, the Hong Kong stock exchange raised US$3.37 billion from 52 IPOs, compared to US$11.83 billion from 60 IPOs completed on the Shanghai stock exchange, data from Refinitiv shows.