Fosun Pharmaceutical to IPO in Hong Kong

Shanghai Fosun Pharmaceutical (Group) Company said it could raise up to US$591 million in its coming Hong Kong IPO.

It will be the first significant new listing in Hong Kong since July. A subsidiary of China’s largest private-owned conglomerate, Fosun Pharmaceutical intends to sell 336 million shares in a price range of HK$11.80 to HK$13.68 (US$1.52 to US$1.76) each, according to sources. That range represents 12.1 to 14 times 2013 forecast earnings.

The company began taking orders from institutional investors yesterday (Tuesday). The IPO to retail investors is scheduled to start today and the company will price the deal early next week ahead of a listing on the Hong Kong stock exchange on Oct. 30.

Analysts believe Fosun Pharmaceutical won't price its Hong Kong IPO at a discount of more than 10% to the 20-day weighted average price of its Shanghai-listed A shares.

To increase the chances of a successful IPO, Fosun Pharmaceutical has secured a combined US$75 million of cornerstone investment from two investors: Prudential Insurance Company of America, which invested US$50 million, and International Finance Corporation with an investment of US$25 million.

UBS AG, China International Capital Corp., J.P. Morgan Chase & Co. and Deutsche Bank AG are handling the Fosun deal. Hong Kong's last big IPO was the July US$900 million listing of Inner Mongolia Yitai Coal Company whose value has risen since the IPO.