Sinopharm Group Co., China’s biggest drug distributor, posted the largest decline in almost three years in Hong Kong trading after saying it will sell as much as HK$4 billion ($515 million) in new shares.
Sinopharm fell 7.2 percent to HK$25.05 at the close in Hong Kong, the largest drop since May 25, 2010. The stock was the fourth-biggest decliner on the MSCI Asia Pacific excluding Japan Index.
The company will sell as many as 165.7 million shares to between six and 10 non-retail investors at HK$24.60 each to raise money for expanding its sales network, Shanghai-based Sinopharm said in a filing today. That’s 8.9 percent less than the stock’s closing price yesterday. The number of shares is equivalent to 16.67 percent and 6.45 percent, respectively, of Sinopharm’s enlarged H-share and total issued share capital after the sale, it said.
“The company needed the money to continue growing,” Carol Xiao, a Shanghai-based analyst at UOB Kay Hian Investment Co. said today. Sinopharm will probably sell additional shares after this year to fund growth, she said.
Sinopharm said it will use the funds raised “for the expansion of pharmaceutical distribution and retail network and replenishment of liquidity after the expansion.”
State-owned China National Pharmaceutical Group Corp. will retain control of the company after the sale, according to the statement.
Morgan Stanley, UBS AG and China International Capital Corp. are the placing agents for the sale.