Baiyunshan Pharma mulls CNY 500m pre-IPO of Guangzhou Pharmaceuticals ahead of HK listing

05 March 2020

Chinese medicine and herbal drink maker Guangzhou Baiyunshan Pharmaceutical is mulling a pre-IPO round of its proposed spin-off entity Guangzhou Pharmaceuticals Corporation (GP Corp) and has been in discussion with a couple of Chinese investors, according to three sources familiar with the situation.

Chinese medicine and herbal drink maker Guangzhou Baiyunshan Pharmaceutical is mulling a pre-IPO round of its proposed spin-off entity Guangzhou Pharmaceuticals Corporation (GP Corp) and has been in discussion with a couple of Chinese investors, according to three sources familiar with the situation.

 

The pre-IPO is still in the process despite the recent coronavirus outbreak in China, the first source said. “They target to raise CNY 500m (USD 72m) with a proposed market valuation of around CNY 5bn,” said the same source.

The move will not affect GP Corp’s Hong Kong H-share sale process as the introduction of a new investor will not change the shareholder structure significantly, the first source said.

The pre-IPO share issuance is likely to comprise 10% of GP Corp’s enlarged share capital, the first source said. Currently, Baiyunshan Pharmaceutical and UK-based investment firm Alliance BMP own 80% and 20% interest in GP Corp, respectively, according to a Baiyunshan Pharmaceutical disclosure.

The fundraise is expected to be completed in the first half of this year, the first source said. “Considering the fragile IPO market, GP Corp’s Hong Kong listing schedule is yet to be determined but a year-end window is still possible,” said the same source.

Baiyunshan Pharmaceutical announced its intention to spin off and list its medicines wholesale and retail business, GP Corp, last year, according to a 10 September company filing.

 

GP Corp, with a history of 69 years, is engaged in wholesale of Western and Chinese medicine, Chinese Herbal Slices, chemicals and biological medicines including vaccines, and the retail of medicine, Chinese herbal slices, medical supplies and equipment, as per the announcement.

 

According to Baiyunshan Pharmaceutical’s interim report, GP Corp is a leading medicine distributor in Southern China, with over 83 medicine retail outlets as at the end of June 2019.

During the first half in 2019, GP Corp posted a net profit of CNY 168m (USD 24m), representing around 20% of Baiyunshan’s total net profit, the report shows.

Baiyunshan Pharmaceutical did not respond to requests for comment.

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