Fosun, a healthcare holding company which already has a Shanghai listing, managed to push through its Hong Kong offering by pricing it at a hefty discount to its existing shares. The new shares were placed at 9.9 percent below the 20-day volume-weighted average price of the Shanghai stock. That’s just inside the maximum 10 percent discount permitted by Chinese regulators.
Fosun also benefited from some big-name backers. The offering attracted interest from respected investors such as Prudential Financial and International Finance Corporation, which together took 15 percent of the offering. Fosun stands to benefit from China’s hefty ageing problem and lack of social safety net, which should create opportunities in private healthcare.
However, interest from other big funds was subdued: the tranche reserved for institutions was reduced to 80 percent from its original 90 percent. And the stock still doesn’t look particularly cheap. Fosun’s Shanghai-listed shares are up 23 percent this year, against a 4 percent fall in the index. After stripping out the value of the firm’s stake in Hong Kong-listed Sinopharm, the holding company trades at 15 times this year’s expected earnings – in line with local rival Shanghai Pharmaceutical.
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