Hong Kong COVID-19 testing laboratory Prenetics has agreed to merge with Artisan Acquisition, a special purpose acquisition company (SPAC) founded by tycoon Adrian Cheng, to become the city’s first unicorn to go public.
Prenetics has reached an enterprise value of $1.25 billion in the transaction that will help it float shares on Nasdaq, according to a statement on Thursday. In addition to the funds already raised by the SPAC, the merger will value the combined equity at $1.7 billion.
Prenetics, whose coronavirus tests helped the English Premier League play through the pandemic, was founded in 2014 as a genetics and DNA testing firm with operations across 10 countries. It develops consumer genetic testing and early colorectal cancer screening, COVID-19 testing, rapid point of care and at-home diagnostic testing, as well as medical genetic testing solutions.
Backed by strategic investors like Chinese e-commerce giant Alibaba Group and US insurer Prudential, Prenetics has developed the Circle HealthPod, a small device that allows people to take $20 disposable COVID-19 tests and receive lab-quality diagnostics in about 20 minutes. The firm is advancing the device to enable tests for influenza and sexually transmitted diseases.
Before moving towards the merger, Prenetics had secured at least $85 million in private financing from Apis Partners, Beyond Ventures, Ping An Ventures, and Gobi Partners, among others, according to its website.
The firm projects its revenue to grow 215% to $205 million in 2021 from $65 million in 2020. It expects annual revenue to cross $600 million in 2025.
Upon completion of the deal, Prenetics will receive proceeds of up to $459 million in cash. That includes the contribution of up to $339 million of cash currently held in Artisan’s trust account; and a fully-committed PIPE, or a private investment in public entity, of $120 million from investors include Aspex, PAG, Lippo, Dragonstone, Xen Capital, and others.
The deal is estimated to be completed in the fourth quarter of this year or the first quarter of 2022, according to the statement.
The combined firm is expected to trade on Nasdaq under the symbol “PRE.” UBS Securities acts as the sole financial advisor to Artisan on the deal while Citigroup works with Prenetics.
The merger came a few months after Artisan raised $339 million in an initial public offering (IPO) in May. The SPAC was launched by New World Development CEO Cheng, the scion of one of the wealthiest families in Hong Kong.
The SPAC mania, which offers more certainty in fundraising and IPO timeframe for privately-held companies, has screeched to a halt in the second quarter of 2021.
According to CB Insights, Q2 2021 saw 61 SPAC filings, i.e., shell companies that have listed shares, garner a combined $11.9 billion. That was a significant drop from Q1, when 298 SPAC filings collectively raised $82.8 billion.