The latest: Shanghai Fosun Pharmaceutical (Group) Co. Ltd. (2196.HK; 600196.SH) announced on Wednesday it plans to raise up to 4.48 billion yuan ($660 million) through a non-public offering of about 107 million A shares to specific targets.
Looking up: The proceeds will be used to prepare for innovative drug clinics, licensing and product launches, as well as to build an intensive comprehensive base and replenish working capital. According to the company, the fundraising will strengthen its internationalization strategy, promote the development of its main business and strengthen its debt structure.
Take Note: On July 27, 2021, the China Securities Regulatory Commission (CSRC) approved that Fosun Pharma could non-publicly issue not more than 128 million new A Shares within 12 months from the date of approval of the issuance, which means the company is just in time to raise capital within the authorization period.
Digging Deeper: Fosun Pharma has been making a lot of moves lately. In addition to its efforts to bring BioNTech‘s (BNTX.US) Covid-19 vaccine Comirnaty to the Chinese market, and to develop important ingredients for Covid oral drugs Molnupiravir and Paxlovid, it has recently acquired a 60% stake in one of the largest private oncology specialty medical centers in Singapore for nearly 1 billion yuan. However, its parent company Fosun International (0656.HK) was recently caught in a bad situation when it was placed on watch list by international rating agency Moody’s in mid-June, fearing that it would not have enough cash to pay its short-term debt due in the next 12 months, and that its recurring revenue might not be enough to support its interest and operating expenses.
Market Reaction: Fosun Pharma’s A-shares and H-shares rose on Thursday, with A-shares closing up 1.2% to 49.44 yuan and H-shares up 2.5% to HK$31.35 at the midday break, but still in the lower-middle range of the past 52 weeks.
Translation by Jony Ho
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