MSPEA in 5x China exit

The firm and co-investor Plenty Gold have sold a partial shareholding in a Chinese pharmaceutical company as the sector drums up investor interest.

Morgan Stanley Private Equity Asia and company management have together sold a 6.8 percent stake in Sihuan Pharmaceutical Holdings in a block trade agreement handled by UBS, according to a disclosure from the Hong Kong Stock Exchange. 

The two shareholders sold a combined 350 million shares in the business, according to the statement. After the sale, MSPEA will still own 5.24 percent of the business. 

Although the price was not disclosed, media reports said that shares were sold at HK$5.24 (€0.51; $0.68) each, a discount of 8.9 percent from its closing price on 9 September. They had originally sought to sell the shares at between HK$5.36 and HK$5.55 per share. The share price was said to have dropped 10.4 percent in Hong Kong on Tuesday. 

However, the block trade sale gained MSPEA a 5x return on its original investment, people familiar with the situation told Private Equity International. The firm privatised the business from the Singapore stock exchange in 2009 and re-listed it in Hong Kong in 2010 while retaining a small share of the business. 

China’s pharmaceutical sector has attracted a lot of private equity capital and has returned positive results for investors. 

MSPEA sells a partial stake in Sihuan

In September, cross-border firm Mandarin Capital Partners sold its 7.57 percent stake in Italian pharmaceutical manufacturing company IMA for €53 million, gaining a 2.2x return after expanding the company significantly into the China market, according to the firm. 

Hony Capital also invested in a Chinese pharmaceutical company recently, taking Simcere Pharmaceutical Group private from the New York Stock Exchange in August. The deal was reportedly worth $495 million, with the firm paying $9.66 per American depository share, representing a 21.4 percent premium over the company’s closing price of $7.96 per ADS on 8 March 2013.

Morgan Stanley Private Equity Asia has invested about $2.5 billion in Asia Pacific, across both minority and buyout opportunities, according to the firm. MSPEA has offices in Hong Kong, Shanghai, Mumbai, Seoul, Tokyo and New York. 

The firm is currently raising its fourth private equity vehicle, which is expected to close on $1.5 billion, possibly this year, according to industry sources.