Chinese Oncology Healthcare Group Hygeia Healthcare Eyes Up To $400m HK IPO

Hygeia Healthcare, a Chinese oncology healthcare group backed by Warburg Pincus, is planning to float shares on the Hong Kong Stock Exchange (HKEX) as the city board sees the appeal from healthcare and biotech companies for fund raising “rather strengthened” during the pandemic period.

The Shanghai-based radiotherapy service provider, in which New York-based private equity major Warburg Pincus holds a 17.24 per cent stake, filed a draft prospectus with the stock exchange on June 8.

The document was heavily redacted. It did not disclose the timing of the offering nor the amount Hygeia Healthcare is seeking to raise.

But an earlier report from South China Morning Post cited a person familiar with the deal that the company will float shares in an IPO between $300 million and $400 million.

The source said that Hygeia Healthcare is finalising terms with several cornerstone investors and it is expected to list on the Main Board before the end on July 2020.

Hygeia Healthcare has hired Morgan Stanley and Hong Kong-based Haitong International Securities as joint sponsors for the deal.

The planned flotation comes as the healthcare and biotech sector has shown high resilience in the Hong Kong capital market while the global economy and capital markets have been fiercely hit by the outbreak of the COVID-19.

According to official statistics, ten out of 16 newly-listed healthcare and biotech companies in Hong Kong have seen their share value rise since late January 2020. In Q1 2020, the Hang Seng Healthcare Index outperformed Hang Seng Index and various HSCI Industry Indices.

InnoCare and Akeso, the two IPOs launched in March and April during the pandemic, have received 298- and 692-times retail oversubscription respectively, and their share prices increased by 60 per cent and 62 per cent from IPO to 30 April 2020, respectively.

The pipeline of healthcare and biotech IPOs in Hong Kong also remains robust. As of 30 April 2020, 12 healthcare and biotech companies have submitted listing applications, including those of four pre-revenue biotech companies.

Hygeia Healthcare, which commenced operations in 2009, now operates a network of 10 oncology hospitals in six provinces in China, providing over 2,000 beds.

The company claims to be the largest oncology healthcare group in China in terms of revenue generated from radiotherapy-related services in 2019. Its revenue increased from 597 million yuan ($84 million) in 2017 to 1.09 billion yuan ($154 million) in 2019, representing a compound annual growth rate (CAGR) of 34.9 per cent.