Hutchison China MediTech

Secondary ADS offering trims CK Hutchison stake

Lighthouse | 28 June 2019

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  • Chi-Med has announced the sale of 12m ADS at a price of $24.00/ADS in an upsized secondary placing by Hutchison Healthcare Holdings Ltd (HHHL), its largest shareholder and a subsidiary of CK Hutchison Holdings. A further 1.8m ADS have been offered to the underwriter under a 30-day option.
  • All proceeds will be received by HHHL, which, after closing (on or before July 2) will own between 49.8% and 51.2% of Chi-Med’s share capital, depending on whether the over-allotment is fully exercised.
  • In addition, Chi-Med, its officers and directors and HHHL have agreed to a 90-day lock-up on sales or transfers of ordinary shares, ADSs or equity-linked securities in connection with this offering.
  • As outlined in Chi-Med’s press release of April 15, 2019, the reduction of CK Hutchison’s 60.2% holding in Chi-Med to below 50% (via over-allotment exercise or dilution) allows deconsolidation from CK Hutchison’s financial accounts. This is mutually beneficial. It enables Chi-Med to invest in maximising the potential of its clinical pipeline independent of CK Hutchison’s earnings objectives.
  • Chi-Med remains committed to its proposed listing on the Stock Exchange of Hong Kong (SEHK) and global offering; however, timings have not been disclosed and are subject to various factors including final SEHK approval, the final board decision, and market conditions. The company will provide a further update in due course.

Trinity Delta view: Chi-Med’s April 2019 announcement emphasised two key objectives: (1) a Hong Kong listing and global raise, and (2) the reduction in CK Hutchison’s shareholding to below 50%. Today’s announcements indicate that the second of these objectives has been achieved just ahead of end-H119.

The closing of the secondary placement should improve Chi-Med’s liquidity and, while it may have been assumed that these events would occur in tandem, the decoupling of the two objectives should facilitate a more straightforward IPO process as it will now only be associated with a primary offering of shares.

The timing of the SEHK IPO and size and structure of the offering – neither of which have been disclosed – are of clear interest to investors. Based on expected cash burn, we assume a potential offering of $200-250m to provide new capital to support pipeline investment. The IPO should enhance Chi-Med’s access to capital, broaden its shareholder base, further raise its profile in its home market, and, like the offering, improve liquidity.

Ahead of the IPO/raise, Chi-Med remains well-funded. We continue to anticipate various clinical, regulatory, and commercial catalysts in 2019 and 2020 that will unlock further shareholder value. Our current Chi-Med valuation of $5.14bn ($38.55/ADS) or £3.95bn (£5.93/share) is a pre-money valuation pending the proposed Hong Kong IPO and global placement.


28 June 2019

Price (US ADS)
(UK share)
Market Cap
AIM London
Company CodesHCM
Corporate clientYes

Company description

Hutchison China MediTech is a Hong Kong headquartered biopharma with an established Commercial Platform in China, and a diverse pipeline of first-in-class/best-in-class selective oral tyrosine kinase inhibitors (Innovation Platform). Its pipeline, discovered in-house, is in development for the China and global oncology markets.


Franc Gregori
+44 (0) 20 3637 5041

Mick Cooper PhD
+44 (0) 20 3637 5042

Lala Gregorek
+44 (0) 20 3637 5043


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