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Treasury & Capital Markets
Blackstone to invest in HEC Pharm
HEC Pharm issues convertible bonds to the tune of US$400 million, with the proceeds intended to support the company’s strategic ambitions in China’s pharmaceutical sector
Chito Santiago 17 Aug 2018

US private equity firm Blackstone is investing in Hong Kong-listed YiChang HEC ChangJiang Pharmaceutical Company (HEC Pharm) through convertible bonds (CBs) in an aggregate principal amount of US$400 million.

Based on HEC Pharm announcement on August 14, the H-share CBs will bear an interest rate of 3% per annum and may be converted into over 82.63 million conversion shares at the initial conversion price of HK$38 (US$4.87). The conversion shares represented about 18.28% of the existing issued share capital of the company at the date of the announcement and about 15.46% of the total issued share capital as enlarged by the issue of conversion shares.

The conversion price represented a premium of about 3% over the closing price of HK$36.90 per H-share as quoted on the Stock Exchange of Hong Kong on the last trading day on August 13. CICC is the placing agent for the transaction.

HEC Pharm intends to use the net proceeds (around US$400 million) to acquire pharmaceutical products, increase production capacity and expand its sales and distribution network, which will support the expansion of its product offerings and market share, helping to meet demand from rapid sales expansion in the future.

At the same time, the company plans to tap this opportunity to introduce Blackstone as a long-term strategic investor to help it carry out drug acquisitions, advance its development strategy, operation and management, strengthen international cooperation, and improve corporate governance and investor relations.

HEC Pharm envisions that as a long-term strategic investor, Blackstone will support the company's sustained growth and ambition to become a leading company in China's pharmaceutical industry.

HEC Pharm chairman Tang Xinfa says the CBs represent the company's first large-scale refinancing exercise since its listing at the end of 2015. "We are pleased to have such an opportunity to engage Blackstone as our long-term strategic investor, providing us confidence in the company's future development," he adds.

Blackstone is one of the largest global alternative investment firms with about US$440 billion of assets under management as of June 30. It has an extensive experience and resources in the healthcare sector, as well as a strong track record in healthcare investments globally.

With 17 years of history, HEC Pharm is a leading pharmaceutical company in China, with a focus on manufacturing, distribution and R&D of pharmaceutical products.

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