A LOW-PROFILE Chinese couple have become the country’s wealthiest people overnight after an initial public offering that also earned Goldman Sachs a near 200-fold profit on the bank’s original $5 million investment in the pair’s pharmaceutical company.
Li Li and his wife Li Tan’s company, Shenzhen Hepalink Pharmaceutical, sold 10 per cent of its shares this week in a Shenzhen-based IPO that values their combined 80 per cent pre-sale stake at about Rmb42.6 billion ($6.2 billion).
Goldman Sachs invested $4.9 million in 2007 to buy a 12.5 per cent stake in Hepalink that is now worth Rmb6.7 billion, a huge return on paper even before the company begins trading on the stock exchange. Hepalink was priced at 73 times its 2009 earnings and at Rmb148 per share it was the most expensive IPO price for a Chinese stock ever.
Almost nothing is known about the couple or their company, which derives virtually all its earnings from selling a single product – a blood thinner harvested from pigs’ intestines and used in kidney dialysis and many types of surgery.
Analysts say Hepalink’s steep valuation reflects the fact it is the only Chinese company accredited by the US Food and Drug Administration to export the “active pharmaceutical ingredient” heparin once it has been extracted from pigs’ intestines.
The couple, who met while studying chemistry at Sichuan University, founded Hepalink in 1998 to produce heparin using a procedure Mr Li says he has been perfecting for 25 years.
On its rudimentary website, the company says it is the largest supplier of heparin in the world, but in its IPO prospectus it says just three pharmaceutical companies account for almost 90 per cent of its sales. – (Copyright The Financial Times Limited 2010)
