Nisha Gopalan is a Bloomberg Gadfly columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.

A funny thing happened in the deals world in Asia this past week. A Hong Kong IPO actually looked like a real offering.

The float of China Resources Pharma was less notable for its size -- at $1.8 billion the biggest drugmaker share sale since Zoetis went public in 2013 -- or its pricing (middling at best), than for the slew of health-focused investors that have committed to the state-owned firm.

Chinese companies raising money via Hong Kong in recent years have been notorious for stuffing their fundraisings with "family and friends" -- investors who not only lock up liquidity for months on end but, being controlled by Beijing, are loath to sell if they find themselves underwater.

These cornerstone investors have been taking up larger and larger portions of the float, making it almost impossible for the general public to get a look in. It also means you've got companies owned in the main by shareholders with no true interest in the underlying business.

Postal Savings Bank of China's  $7.4 billion IPO, for instance, counted China State Shipbuilding among its cornerstones, hardly a savvy entrepreneur. Cofco Meat, expected to price Monday, has air-con maker Haier as one of its biggest backers, again, not exactly a logical fit.

Hong Kong's preponderance of these types of shareholders isn't helping spark interest in the city's beleaguered stock market. It's also creating an uphill battle for investment bankers trying to sell Chinese companies to institutional investors.

Just Not That Interested
Hong Kong IPO volumes are well down this year
Source: Bloomberg

China Resources Pharma is different. It has investors that could actually benefit the Beijing-based maker and distributor of drugs. About half of its IPO has been snapped up by eight cornerstone names that are either in the domestic pharmaceuticals space or are big global players.

There's Reckitt Benckiser, whose brands include Durex condoms, Nurofen and Strepsils, and Japan's Fujifilm, the one-time photography supplier that's become a healthcare behemoth. The biggest cornerstone is Guangdong Hengjian Investment Holding, a large maker of medical devices.

Healthy Sales
China Resources Pharma's revenue has been rising as demand for drugs in Asia's biggest economy grows
Source: China Resources Pharmaceutical IPO prospectus

It helps also that China Resources Pharma is in perhaps what is one of the country's hottest industries outside of tech and online food delivery. Pollution, aging and urbanization are all contributing to a populace that's sicker more often, and as the nation's middle class expands, there's more interest in the Western brand-name drugs China Resources Pharma distributes. According to QuintilesIMS, China, the second-biggest pharmaceutical market in the world after the U.S., is set to spend some $190 billion a year on drugs by 2020, up from about $115 billion in 2015.

One IPO with a gold-star investor base may not be the turning point Hong Kong's initial share-sale market needs. But China Resources Pharma shows it's possible to get strong backers that can help a company's long-term vision, rather than falling back on state support to drum up demand. And that in itself is a solid start.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Nisha Gopalan in Hong Kong at

To contact the editor responsible for this story:
Katrina Nicholas at