Leading private equity firm Warburg Pincus has taken a 5.4% stake in WuXi PharmaTech, the fast-growing Chinese contract research, development and manufacturing company that recently formed a preclinical joint venture with US-based contract research organisation Covance.
Warburg Pincus acquired a total of 26,808,496 of WuXi’s outstanding ordinary shares (equivalent to 3,351,062 American Depositary Shares) from affiliates of United Overseas Bank, one of the early venture investors in the Chinese company.
Dr Ge Li, chairman and chief executive of WuXi PharmaTech, said that, as a “premier global private equity firm with tremendous experience in the life science industry”, Warburg Pincus “not only will strengthen our investor base, but more importantly we believe that it will provide strategic and business assistance to us”.
Stewart Hen, managing director of Warburg Pincus based in New York, described WuXi as “a clear leader in the rapidly growing drug and medical device outsourcing industry”, with “an impressive track record of growth and a distinguished reputation for customer service”. The private equity firm has invested US$6.6 billion in healthcare-related companies around the world and has been investing in China since 1995.
Set up in December 2000, WuXi PharmaTech was still turning in net revenue growth of 69% for the last quarter, while operating income more than doubled over the first quarter of 2007. Revenues were partly boosted by the acquisition of AppTec, a US supplier of laboratory testing, contract R&D and manufacturing services, which was completed on 31 January.
The Chinese company’s US share price more than tripled on the back of an initial public offering in New York last August, although it recently cancelled a planned follow-on offering, citing “stock market volatility and current market valuations and our belief that our cash flows will remain healthy and alternative financing options, if required to meet our funding needs, are available”.
Previous private equity investors in WuXi PharmaTech have included Fidelity Asia Ventures and the US-based General Atlantic LLC.
