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Wuxi Biologics to spin off international business in Hong Kong IPO

Wuxi Biologics to spin off international business in Hong Kong IPO
Wuxi Biologics to spin off international business in Hong Kong IPO

As per the source, China's leading biologic drugs services company, Wuxi Biologics, is set to separate its international business, Wuxi XDC, through an initial public offering (IPO) in Hong Kong. The company will retain a 60% stake in Wuxi XDC as its subsidiary following the spin-off, as stated in a filing submitted to the stock exchange on Sunday.

According to the filing, Wuxi Biologics plans to expand its services beyond antibody-drug conjugates (ADCs) to enhance its in-house discovery and development capabilities, manufacturing capacity, and support for targeted cancer therapies. The capital raised from the IPO will be utilized for new manufacturing facilities in Singapore, production capacity expansion in China, making strategic investments and acquisitions, as well as for working capital and general corporate purposes.

Notably, in the first quarter of this year, Wuxi XDC witnessed a 16.5% increase in net profit to US$11.16 million compared to the corresponding period last year. The shares of Wuxi Biologics, which debuted on the Hong Kong stock exchange in 2017, rose by as much as 3% during early morning trading on Monday.

Apparently, this announcement coincides with a series of biotech companies seeking to list their shares in Hong Kong. As per industry insiders, Insilico Medicine, based in the city, is aiming for a US$200 million IPO, whereas Sichuan Kelun-Biotech Pharmaceutical is preparing for its US$208.6 million listing on Tuesday.

According to Louis Lau, a partner at KPMG China, Hong Kong's biotechnology ecosystem has experienced significant growth since the introduction of chapter 18A legislation, which allows pre-revenue biotech firms to go public in the city. Lau stated that Hong Kong has become an attractive option for IPO applicants in specialized technologies due to its position as a "connector" between mainland China and international markets. Lau believes that the uncertainties stemming from US-China tensions provide Hong Kong with an advantage over the US market.

The sources cite that Morgan Stanley, Goldman Sachs, and JPMorgan are appointed as joint advisers by Wuxi Biologics for the IPO. However, the expected fundraising amount is not yet disclosed.


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