Singapore’s sovereign wealth fund GIC and BlackRock were among cornerstone investors who bought shares to the tune $150 million in Chinese biotech firm 3SBio, ahead of the company’s $712 million Hong Kong initial public offering.
The company that is headquartered in northeastern Chinese city of Shenyang, along with its shareholder Citic Private Equity Funds Management Co, are jointly offering 606.1 million shares at HK$8.30 to HK$9.10 apiece, Bloomberg said in a report, quoting the terms for the deal, and added that new shares account for 80 per cent of the sale.
Off the total shares on offer, 3SBIO is selling 484.9 million new shares while CITIC Private Equity is selling 21.2 million shares.
The Bloomberg report further said that 3SBio is adding to the $11.9 billion of first-time share sales in Hong Kong this year, to tap into the record seven-year surge of the city’s stock market.
The company, that had been taken private after it was de-listed from the Nasdaq two years ago, will use the IPO proceeds fund acquisitions and hire more staff, as it targets a higher share of the Chinese drug market.
The report added, quoting terms, that six cornerstone investors had reached a deal to buy stock worth $150 million in the offering. Of these, GIC will buy shares for $30 million and BlackRock for $40 million.
Citic Securities, Goldman Sachs and Morgan Stanley are joint bookrunners on the deal.
3SBio plans to price the offering on June 4, and it is set to debut on the Hong Kong stock on June 11.
Traditionally, cornerstone investors – who include well-known institutions, sovereign wealth funds and celebrities – are those that buy shares in a company before the IPO, and often pledge to stay invested for a certain period.
Besides, it is also common for companies, especially those in difficult market conditions, to invite cornerstone investors to buy their shares under the placing tranche, as this helps enhance the IPO and also increase investors’ confidence.