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Sihuan Pharma Rises on Trading Debut, Seeks Buyouts

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Oct. 28 (Bloomberg) -- Sihuan Pharmaceutical Holdings Group Ltd. surged on its Hong Kong trading debut after a HK$5.75 billion ($741 million) initial public offering to investors including George Soros as it raised funds for acquisitions.

Sihuan, which sells treatments for heart disease and stroke in China, traded at HK$5.87 as of 11:34 a.m., 28 percent higher than the HK$4.60 a share it sold for in the global offering. The stock rose as much as 32 percent in premarket trading.

Investors offered to buy about 481 times as many shares as offered in the initial sale, Sihuan, based in Haikou, China, said in a statement yesterday. The company plans to use about 20 percent of the proceeds to boost its drug development and 30 percent for potential acquisitions, it said in a stock exchange filing.

The company sold 1.25 billion shares in a sale managed by Morgan Stanley and UBS AG. The shares had been offered at HK$3.88 to HK$4.60 apiece.

Quantum Partners LP, a Soros fund, China Life Insurance Group, Value Partners Ltd. and a fund managed by Hillhouse Capital Management Ltd. are among seven so-called cornerstone investors who have each invested $190 million, according to Sihuan’s offer document.

New Horizon Capital, a private equity company co-founded by the son of Chinese Premier Wen Jiabao, reaped a $46 million profit after it was forced to pull out of the offering because of concerns raised by Hong Kong’s regulator. New Horizon said in an Oct. 18 statement that Wen Yunsong isn’t running the fund and it didn’t breach exchange rules when it agreed to buy 9 percent of Sihuan.

Sales Network

Sihuan supplies Kelinao and Anjieli injectable drugs used to treat heart attacks and strokes to hospitals in China through a sales network that covers almost every province, according to the company’s website.

The rest of the capital raised through the offering will be used for business operations such as enhancing sales distribution and buying medicines to expand Sihuan’s product lineup, the company said.

Net income more than doubled to 255 million yuan ($38 million) in the six months ended June 30 from a year earlier, the company said in a stock exchange filing. Revenue increased 47 percent to 473 million yuan in the same period, it said.

To contact the reporter on this story: Kanoko Matsuyama in Tokyo at kmatsuyama2@bloomberg.net Simeon Bennett in Singapore at sbennett9@bloomberg.net

To contact the editor responsible for this story: Jason Gale at j.gale@bloomberg.net

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