Blackstone Invests USD 400 Million in HEC Pharmaceutical

U.S. private equity firm Blackstone Group LP (NYSE: BX) has signed a deal to invest USD 400 Million in Hong Kong-listed YiChang HEC ChangJiang Pharmaceutical Co. via convertible bonds, HEC said Wednesday.

The H share convertible bonds will bear an interest rate of 3% per annum if issued, at an initial conversion price of HK 38 per share, HEC Pharma said in a stock filing on Tuesday night.

The drug maker, based in Yichang in central China’s Hubei province, is planning to use the funds to acquire drugs and other pharmaceutical products.

Blackstone, as a long-term strategic investor, will also improve HEC Pharma’s strategy, operations management and international cooperation.

Shares in HEC Pharma tumbled 7.4% to HK 33.60, hitting their lowest since April 18th.

Fitch Ratings said in a report on July 31st, that such scandals highlighted the risks facing China’s pharmaceutical companies, which focus primarily on the bulk production of a small number of products, making them vulnerable to safety incidents.  Seventeen-year-old HEC Pharma develops, manufactures and sells pharmaceutical products used to treat endocrine and metabolic diseases and cardiovascular diseases, and in the anti-viral field.

HEC Pharma has recently issued a positive profit alert for its interim results for the first half, expecting that it will record an at least 110% increase in profit attributable to equity shareholders compared with the same period last year.

Blackstone raised about USD 9.4 Billion in June for two new funds – USD 7.1 Billion in the largest-ever fund dedicated to real estate investments in Asia, and its first private equity fund for the region.

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