Shanghai Pharma to raise $1.2bln via HK IPO

Company to offer 25% stake to fund acquisition of rivals and sales networks.

Shanghai Pharmaceuticals Holding Co Ltd, the Chinese partner of Roche Holding AG, said on Wednesday it plans to raise at least 8 billion yuan ($1.2 billion) through a public share offering in Hong Kong to fund acquisitions.

Shanghai Pharmaceuticals, China's second-biggest drug company by revenue, will sell up to a 25 percent stake in the offering, to be completed by the end of June next year, and would use most of the proceeds to acquire rival companies and sales networks at home and abroad, the company said.

"It's a strategic move that would enable the company to accelerate growth and narrow its gap with bigger rival Sinopharm Group," said Sun Liang, an analyst with China International Capital Corp.

China is encouraging the formation of major domestic players in the pharmaceutical industry so as to better compete with global giants such as GlaxoSmithKline and Bristol-Myers Squibb, which have been investing heavily in China.

Shanghai Pharmaceuticals does not currently have a listing in Hong Kong, where Chinese companies can list to gain access to international investors and raise their profile.

The drug firm, controlled by the Shanghai government, acquired two listed companies in March as part of a government-backed restructuring aimed to boost the company's competitiveness.

View the full story in Reuters.