Capital Group Eyes Pre-IPO Stake in China Biotech Unicorn

Updated on
  • Innovent planning IPO that could raise over $200 million
  • U.S. fund manager has been pursuing emerging market startups

Capital Group Cos., the U.S. asset manager that’s been backing startups in emerging markets, is in talks to invest in Chinese biopharmaceutical firm Innovent Biologics Inc., people with knowledge of the matter said.

Capital Group would join other investors in a funding round for Innovent ahead of a planned listing, according to the people. The Suzhou-based cancer-drug maker has been discussing a valuation of more than $1 billion with the pre-IPO investors, the people said, asking not to be identified because the information is private. That would bring Innovent into the ranks of so-called unicorns, or early-stage companies that boast billion-dollar valuations. 

Closely held Innovent is planning an initial public offering this year that could raise more than $200 million and has been weighing the U.S. as a listing venue, the people said. It has also been considering Hong Kong as a possible IPO destination, according to one of the people. Deliberations are at an early stage, and details of any potential transaction could change, the people said.

An Innovent listing would tap into investor interest in the fast-growing area of biopharmaceuticals, which are often more complex to research and manufacture than chemical drugs and can sometimes address previously untreatable conditions. Shanghai-based Zai Lab Ltd., which is developing cancer medicine, raised $173 million in its U.S. IPO in September, while shares of Wuxi Biologics Cayman Inc. have risen more than 160 percent since their Hong Kong debut last year.

Didi Backer

Innovent Chief Financial Officer Ronnie Ede said he has no comment. A representative for Los Angeles-based Capital Group declined to comment.

Capital Group had more than $1.6 trillion under management at the end of June, according to its website. Its private equity arm has helped fund other Asian health-care companies, investing in India’s Intas Pharmaceuticals Ltd. in March last year and buying a stake in New Delhi-based Mankind Pharma Ltd. in 2015. Capital Group is also an investor in Didi Chuxing, the ride-hailing giant that defeated Uber Technologies Inc. in China, and Indonesian ride-hailing service Go-Jek.

Any transaction would add to the $6.6 billion of private equity deals targeting the Asian health-care industry over the past 12 months, data compiled by Bloomberg show. Existing investors in Innovent include Fidelity Investments, Singapore state investment company Temasek Holdings Pte, Ping An Insurance Group Co. and China Life Insurance Co.’s private equity arm. 

Innovent has partnered with Eli Lilly & Co. to develop up to three cancer treatments both inside and outside China. The company also develop treatments for inflammatory diseases and ophthalmology alongside cancer drugs.

Innovent was founded in 2011 by Michael Yu Dechao, who held senior roles at U.S. gene therapy companies including Cell Genesys Inc. before returning to China, his LinkedIn profile shows. He is a member of China’s “Thousand Talents Program,” a government initiative to attract high-level overseas Chinese scientists back to the country, according to Innovent’s website.

— With assistance by Crystal Tse, Jonathan Browning, John Gittelsohn, and Hui Li

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE