이 기사는 2019년 11월 28일 08:00 thebell 에 표출된 기사입니다.

With South Korea's CJ Healthcare proceeding with a process to choose banks to work on its planned initial public offering (IPO), eyes are shifting to the biotech company's value.

CJ Healthcare has recently had a preliminary meeting with shortlisted advisory firms, followed by holding a presentation competition on November 20, according to investment banking industry sources. The company intends to complete the selection process within the year.

Included in the short list are Mirae Asset Daewoo, Korea Investment & Securities, Samsung Securities, KB Securities and Shinhan Investment among domestic securities firms, as well as JP Morgan among foreign investment banks to attract bids from overseas investors.

The company's value estimated by these candidates ranges from 1.5 trillion won ($1.3 billion) to four trillion won ($3.4 billion). Most of them are said to have valued the company at around two trillion won ($1.7 billion), while only one estimated the value at roughly four trillion won.

"Some underwriters tend to inflate the issuer's value in order to win the role on a deal. Even with this in mind, four trillion won valuation is very notable," said a market insider, adding "[The valuation] reportedly was based on CJ Healthcare's potentially positive future."

CJ Healthcare, acquired by Kolmar Korea in April of 2018, has its minimum valuation target that it can't afford to miss. When Kolmar Korea formed a consortium with three financial investors - H&Q, Mirae Asset Private Equity and STIC Investment - to purchase a 100 percent stake in the healthcare company for 1.31 trillion won ($1.1 billion), it promised to help their exit by listing the company no later than 2020.

This means that the company needs to be valued in its planned IPO at least above the financial investors' invested value. Many outside analysts have estimated a minimum level of the company's value to satisfy the financial investors to be 1.5 trillion won, considering their expected internal rate of return (IRR).

"It remains to be seen whether or not CJ Healthcare will choose a candidate who suggested the highest value to lead its IPO. It may place a higher priority on other factors to ensure the success of the IPO, which could make an impact on the financial investors' exit," said an industry insider, adding "All five domestic securities firms in the short list reportedly valued the company above the minimum valuation target."

CJ Healthcare's IPO is another large-scale deal in the domestic biotech sector, along with SK Biopharmaceuticals' offering expected early next year. The deal will likely attract interest from investors who want to get exposure to biotech and a high-profile name. With a lack of multi-trillion won deals in the market, lobbying among advisory firms to win a senior role on the deal has also become intense.

CJ Healthcare's K-Cap, a drug for gastro esophageal reflux disease, received approval from the Ministry of Food and Drug Safety last July. It has emerged as a blockbuster drug, recording over 12.5 billion won ($10.6 million) of sales in only five months since its launch in March.

(By reporter Yang Jung-woo)