Private equity heads for healthcare firms at 4 sites

Domestic private equity firm China Science and Merchants Capital Management Ltd will invest at least 30 billion yuan ($4.8 billion) in the nation's health industry within five years, its chairman said.

Overseas yuan gets nod in mainland PE market

The funds will go into companies in industrial bases in Tianjin, Shanghai, Guangzhou and Huzhou in Zhejiang province that were set up by CSM Group and local governments.

"The supply of healthcare products and equipment in China can't satisfy the huge demand of the public, so there are many investment opportunities," said Shan Xiangshuang, chairman of CSM Group.

CSM Group and Healthcare UK have signed a memorandum of understanding to bring advanced medical technology and products from Britain to China. Healthcare UK is a joint initiative of the Department of Health, UK Trade and Investment and NHS England.

The two parties will introduce British healthcare companies to the industrial bases and innovation platforms of CSM Group. There were 11 innovation platforms to support startup enterprises in 2013, and that number will be 50 by the end of this year.

With more than 60 billion yuan under management, CSM Group has invested more than 10 billion yuan in more than 100 health-related enterprises, of which Xiangxue Pharmaceutical Co Ltd and Ringpu Bio-Pharmacy Co Ltd have been listed.

In 2009, CSM Group and China Securities Co Ltd invested 64 million yuan in Xiangxue, which went public on the ChiNext board in 2010. Ringpu received 48 million yuan from CSM Group in 2008 and went public on the ChiNext board in 2010.

Shan said that CSM Group is also investing in early-stage companies in the medical sector. For example, Micro-Tech received 4 million yuan from CSM Group when it was just starting up. Now, it's preparing to go public.

Private equity firms are seeking opportunities in China's health market. For instance, the Carlyle Group LP is setting up its fourth Asia-focused buyout fund for healthcare and consumer investments and China is its largest destination.

Warburg Pincus LLC, Fosun Group and CDH Investments were also active in the sector in 2013.

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