Temasek-backed firms buy stake in VIVA Biotech unit ahead of listing

12:48 am Monday, June 12th, 2023

(Reuters) -Entities backed by Singapore’s Temasek and Chinese investment firm HighLight Capital agreed to a deal worth 1.06 billion yuan ($148.7 million) for stakes in a unit of VIVA Biotech Holdings, the pharmaceutical service company said late on Sunday.

The deal, which will dilute VIVA Biotech’s stake in VIVA Shanghai to about 75.79% from 100%, comes as the Chinese drug discovery and manufacturing service provider plans to restructure its businesses and list the Shanghai firm on an onshore stock exchange.

VIVA Biotech said it will use the proceeds to redeem convertible bonds, which will help it to “settle its outstanding liabilities without occupying its internal resources.”

The deal included capital injection into VIVA Shanghai by new investors and sale of existing interest in the Shanghai firm, the filing showed.

Daxue Investments, Temasek Holdings’ indirect unit, and True Light P, held by Temasek-owned True Light Capital GP Pte. Ltd, will altogether hold 17.55% stake in VIVA Shanghai after the deal, according the filing.

HLC SPV and Qingdao Hongyi, both linked to HighLight Capital, will obtain a total of 6.66% stake from the transaction.

VIVA Biotech’s restructuring will transfer all assets and personnel related to its early-stage drug discovery business to VIVA Shanghai, and move out of the Shanghai unit those related to drug development and manufacturing service, the filing showed.

Investors in the deal expect application for VIVA Shanghai’s listing to be filed by June 30, 2024, said the filing.

VIVA Biotech said on Sunday in a separate filing it is issuing a total of HK$470 million ($60 million) worth of new convertible bonds to HLC SPV and Temasek-backed Huangshan Investments and True Light H, with proceeds set to fund the restructuring plan.

Shares of VIVA Biotech Holdings on Monday fell as much as 16.8% to HK$1.58, their lowest since June 5.

($1 = 7.1273 Chinese yuan renminbi)

($1 = 7.8392 Hong Kong dollars)

(Reporting by Roxanne Liu and Kane Wu; additional reporting by Donny Kwok; Editing by Stephen Coates)