Actis inks its first China healthcare deal

Actis has taken a minority stake in Nanjing Micro-Tech, a Chinese medical equipment provider.

Emerging markets firm Actis has invested in Chinese medical equipment provider Nanjing Micro-Tech, the firm has revealed. This is Actis’ first healthcare investment in the country.

Financial details of the transaction were not disclosed, but Jason Zhang, the director of China healthcare investments at Actis, said that the deal size is somewhere around the firm average of $50 million.

Nanjing Micro-Tech was founded in 2000 and has grown to become the largest local player in the Chinese endoscopy consumable sector, according to an Actis statement. It also has the leading market position in non-vascular stents and disposable biopsy forceps. The diagnosis and treatment that its products facilitate can dramatically improve patient prognosis.

Although Actis holds a minority stake, it is now one of the company’s largest shareholders, Zhang added. No debt funding was used for this transaction, and Actis received an undisclosed number of board seats on the company.

The investment was made from Actis China III, which is almost fully invested, according to Zhang.

Actis will likely make more healthcare deals in China this year, he said. The firm started looking at the sector in China in 2007, and various demographic developments in China are making the sector increasingly attractive, according to the statement. China's ageing population, rising income levels and better insurance coverage are driving the need for quality healthcare.

The firm was attracted to the deal with Nanjing specifically because of its extensive healthcare experience in other emerging markets, like India and Africa, Zhang said. Actis is active in healthcare in those markets, with 40 investments in India alone, and Nanjing was likewise attracted to the prospect of entering emerging markets.

Nonetheless, the firm had to spend a lot of time persuading the founders that it was a good fit for Nanjing Micro-Tech, he said, adding that this is an indication that investors will find no easy deals in China anymore.

“There’s a lot of money in the market, so you need to convince the founders `why you,'” Zhang said.

With $5 billion in assets under management across Asia, Actis currently has over $1 billion invested in Chinese companies, according to the firm.

The firm completed a secondary exit of one of its portfolio companies, Xiabu Xiabu, in December, totaling a more than 3x exit, PEI reported earlier.