Qilian International, a Chinese provider of pharmaceutical and chemical products, has set the price for its initial public offering (IPO) in the US on Tuesday to raise $25 million.
China-based Qilian plans to offer 5 million ordinary shares at an offering price of $5 per share, said the firm in a statement. Its ordinary shares have been approved for listing on the Nasdaq Global Market and are expected to commence trading on January 12 under the ticker “QLI.” New York-based investment bank Univest Securities serves as the lead bookrunner of the IPO.
The firm is poised to become the first Chinese company to launch a public share sale in the US in 2021, following a continued trend of Chinese businesses seeking financing in US stock exchanges.
Despite unsettled tensions between the world’s two largest economies and increasingly tangible threatens from the US to delist Chinese issuers, China-based companies raised a total of $11.7 billion through 30 IPOs in the US in 2020 – a six-year high since 2014 when Alibaba went public as the biggest IPO to date, according to a Dec. 17 report from Renaissance Capital.
Qilian granted the underwriters a 45-day option to purchase up to an additional 750,000 ordinary shares at the offering price, less underwriting discounts. The over-allotment option will close on or about January 14, subject to the satisfaction of customary closing conditions.
With over 50 years of history, Qilian focuses on the development, manufacture, marketing, and sale of pharmaceutical and chemical products, such as licorice products, oxytetracycline products, traditional Chinese medicine derivatives, sausage casings, and fertilizers. Based in northwestern China’s Jiuquan City, Gansu Province, its products are sold in over 20 provinces in the country.
The firm expects its net revenue to increase by 5-8 per cent for the year ended September 31, 2020, compared to one year earlier when the net revenue stood at nearly $46.1 million, according to its prospectus. Its gross profit for the year ended September 21, 2019, was about $9.7 million.
The IPO offering will help Qilian compete for a larger market share in China’s highly fragmented pharmaceutical market. The pharmaceutical market in China – its size was estimated to be over 2.6 trillion yuan ($401.7 billion) in 2019 – had over 4,000 players. The top 20 companies accounted for about 20 per cent of the market, leaving space for smaller firms like Qilian to compete and grow, according to Frost & Sullivan.