이 기사는 2019년 11월 26일 08:00 thebell 에 표출된 기사입니다.

South Korea's CJ Healthcare Corporation has begun the process for selecting financial firms to work on its planned initial price offering (IPO). The deal would be another large-scale listing in the domestic biotech sector, along with SK Biopharmaceuticals' planned IPO, leading banks to jockey for roles on the deal.

According to industry sources, CJ Healthcare held a presentation competition last Wednesday to choose underwriters for its IPO, with an aim to complete the selection process within the year. Several domestic and overseas financial firms have been included in the short list. Among them are Mirae Asset Daewoo, Korea Investment & Securities, Samsung Securities, KB Securities, Shinhan Investment and JP Morgan.

"[CJ Healthcare] is a biotech company posting an annual operating margin of about 10 percent. Intense competition is expected among banks to win roles on the deal," an industry insider said.

The IPO is being structured to help the company's financial investors exit their investment. Currently, a 100 percent stake in the healthcare company, worth 1.31 trillion won ($1.1 billion), is held by CKM, a special-purpose entity created by a consortium of Kolmar Korea and three financial investors - H&Q, Mirae Asset Private Equity and STIC Investment - last year.

These investment firms, which have combined holdings of a 49.3 percent stake in the company, initially invested in CJ Healthcare under the condition that it should list by 2022. Kolmar Korea, which holds the remaining 50.7 percent stake in the company, also agreed then to provide drag-along rights to the investment firms, which, if exercised, would allow them to sell shares under the same condition as a majority stakeholder.

Another reason for the company to publicly list shares is likely to secure funds necessary for drug development. CJ Healthcare has posted an annual operating margin of nearly 10 percent, which implies a relatively high profitability among domestic biotech companies. But it still needs to pour a vast amount of money into research and development each year in order to compete with other biopharmaceutical companies. In this light, the healthcare company could also issue new shares in the IPO, in addition to an offer for sale by the existing shareholders (i.e. three financial investors), to secure additional funds.

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 about 12.5 billion won ($10.6 million) of sales in only five months since its launch in March, which can help boost the IPO.

The domestic investment banking industry is watching closely an ongoing selection process, as the CJ Healthcare's offering is considered another large-size deal after SK Biopharmaceuticals' expected IPO in early next year. To financial firms that failed to win roles on SK Biopharmaceuticals' IPO, this is their second chance. SK Biopharmaceuticals, SK Group's biotech arm, has recently named NH Investment & Securities and Citi Global Market Securities as bookrunners for its IPO, while also hired Korea Investment & Securities and Morgan Stanley as co-managers.

(By reporter Yang Jung-woo)