Chinese medical products maker Meihua eyes up to $69m in US IPO

Photo by Diana Polekhina on Unsplash

Amid a regulatory clampdown on overseas listings by Beijing, Chinese medical consumables manufacturer Meihua International Medical Technologies has filed a preliminary prospectus to raise up to $69 million in an initial public offering (IPO) in the US.

In a heavily redacted filing with the US Securities and Exchange Commission, the Yangzhou-based firm did not specify the number or price of American depositary shares (ADSs) it intends to sell. Its prospectus showed that it plans to list on the Nasdaq stock exchange.

Meihua sells disposable medical products such as testing kits, masks, bandages and surgical tapes to hospitals, pharmacies, medical institutions, and medical equipment companies in the local and international markets.

China’s medical disposables market has grown rapidly due to an improvement in living standards and increased demand for healthcare, according to recent data. In 2020, China’s low value-added medical disposables market was worth about $14.9 billion, up 25.97% from 2019.

Proceeds from the listing will be used to construct a new factory, acquire a local disposable medical device manufacturer, boost R&D capabilities, and hire R&D talent and senior executives, the company said in its prospectus.

Meihua posted revenue of $89.1 million in 2020, up by about 12% from a year earlier. Its full-year net income grew 23% to $15.4 million.

If successful, Meihua could become the first Chinese firm to list in the US since the regulatory crackdown began. In recent weeks, several companies including medical data group LinkDoc Technology and bike-sharing operator Hello, both backed by Alibaba Group Holding, have called off their overseas IPOs.

Autonomous driving startup Pony.ai has also put on hold its plans to go public in New York through a merger with a blank-cheque firm at a $12 billion valuation.

Beijing has mandated technology firms listing abroad to seek approval from the Cyberspace Administration of China (CAC), the country’s cybersecurity watchdog, especially if they handle the personal information of more than one million users.

The US Securities and Exchange Commission (SEC) now also requires Chinese IPO applicants to explain their legal structure and convince the regulator that their business is not at risk of interference from the Chinese government.

Without discussing the regulator clampdowns by Beijing and the US, Meihua said US regulatory bodies may be limited in their ability to conduct investigations or inspections of its operations in China.

“There is no guarantee that requests from US federal or state regulators or agencies to investigate or inspect our operations will be honored by us, by entities who provide services to us or with whom we associate, without violating PRC legal requirements, especially as those entities are located in China,” the company said in its prospectus.

The medical products administration of the State Council, China’s top administrative authority, is responsible for developing the classification rules for medical devices and maintaining catalogues of classified devices.

Based on information on the production, distribution, and use of medical devices, the State Council analyzes and evaluates the risk levels of medical devices and adjusts the classification rules and classification catalogues.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.