Chinese heart valve replacement maker Venus Medtech plans to raise up to US$381 million in Hong Kong IPO

Chad Bray

Venus Medtech (Hangzhou), a Chinese maker of heart valve replacement devices, plans to raise as much as US$381 million in an initial public offering in Hong Kong next month, the latest sign that confidence is returning to the city’s financial market.

The Hangzhou-based company filed paperwork with the Hong Kong stock exchange late on Monday to proceed with its offering and began its roadshow to investors on Tuesday.

The company expects to price its offering of 78.5 million shares in a range of HK$29 to HK$33 a share. If an overallotment of shares is fully exercised, the company would raise US$381 million.

Hong Kong has endured nearly six months of protests and civil unrest this year in one of the city’s worst political crises. The unrest has put visitors off coming to the city, hitting the bottom lines of retailers, restaurants and hotels and sent the local economy into a “technical recession” in the third quarter.

Hong Kong’s stock market bulls shrug aside city’s street protests

It also caused several companies, including Budweiser Brewing Company APAC and logistics real estate developer ESR Cayman, to delay their IPOs this summer as uncertainty over the unrest hit valuations.

Valuations have recovered somewhat, with Budweiser raising US$5.8 billion in September and ESR Cayman raising US$1.6 billion in October.

Chinese e-commerce giant Alibaba Group Holding, which chose New York over Hong Kong for its IPO five years ago, raised US$12.9 billion in a secondary offering in Hong Kong this month. Alibaba is the parent company of the South China Morning Post.

The revived IPOs and Alibaba’s listing pushed the Hong Kong bourse back to the top in its annual battle with the New York Stock Exchange and Nasdaq for fundraising capital.

HKEX drops London exchange bid after its overtures were spurned

Alibaba’s shares rose 6.7 per cent in midafternoon trading on their debut in Hong Kong on Tuesday.

Last week Home Credit, a Prague-based consumer finance lender that counts China as its biggest market, shelved its plans for a US$1 billion Hong Kong listing, citing “market conditions”.

The Venus Medtech offering has five cornerstone investors, including Asia-focused private-equity firm Hillhouse Capital and Singapore sovereign wealth fund GIC.

The IPO is expected to price on December 4 and begin trading on December 10.

Venus Medtech manufactures devices for transcatheter aortic valve replacements, holding a 79.3 per cent market share for device implants in China last year. It reported a loss of 138.2 million yuan (US$19.7 million) in the first five months of 2019, compared with a loss of 50.2 million yuan in the same period a year earlier.

The company plans to use the IPO proceeds to commercialise its VenusA-Valve product, as well as for research and development and general corporate purposes. The VenusA-Valve is the first transcatheter aortic valve replacement (TAVR) device approved by China’s National Medical Products Administration and commercialised in the mainland, according to the company.

Goldman Sachs, CICC, Credit Suisse and CMS are acting as joint sponsors on the IPO.

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