이 기사는 2019년 12월 03일 08시00분 thebell에 표출된 기사입니다

South Korea’s CJ Healthcare plans to complete the process of selecting bookrunners for its expected initial public offering (IPO) soon.

CJ Healthcare is expected to inform advisory firms about bookrunners’ roles within this week, according to investment banking industry sources. The biotech company held a presentation competition among shortlisted firms about two weeks ago. Included in the shortlist are five domestic brokerage firms – Mirae Asset Daewoo, Korea Investment & Securities, Samsung Securities, KB Securities and Shinhan Investment – and the U.S. investment bank JP Morgan.

Kolmar Korea, the owner of CJ Healthcare, has reportedly set a valuation target for the biotech company’s IPO at more or less a reasonable level. CJ Healthcare was acquired by Kolmar Korea in April of 2018 for 1.31 trillion won ($1.1 billion) through CKM, a special purpose company formed by a consortium of Kolmar Korea and three financial investors – H&Q, Mirae Asset Private Equity and STIC Investment. The primary purpose of the IPO is to help the financial investors exit their investment in the company.

Previously Kolmar Korea contributed 360 billion won ($304 million) to CKM, while the financial investors invested in redeemable convertible preference shares (RCPS) worth 350 billion won ($296 million) issued by CKM. Kolmar Korea raised the remaining 600 billion won ($507 million) for acquisition through acquisition financing.

The firms in the short list have calculated the company’s equity value to be around 710 billion won ($600 million), after subtracting acquisition financing from the total acquisition value. Considering this and Kolmar Korea’s goal discussed during a preliminary meeting, they have reportedly estimated the company’s IPO value to be in the range of 1.5 trillion to 2 trillion won ($1.3 billion to $1.7 billion).

CJ Healthcare is targeting to list in 2022, which means the advisory firms have anticipated the biotech company’s value to grow two to three times over the four years after the acquisition by Kolmar Korea in 2018. This estimated value is considered somewhat reasonable among experts in the domestic investment banking industry, given the company’s high operating margin and its future growth potential.

In 2018, CJ Healthcare posted 11.5 percent of operating margin, which implies a relatively high profitability among domestic peers. Its three-year average for operating margin is also as high as 13.5 percent.

In addition, K-Cap, a treatment for gastro esophageal reflux disease developed by CJ Healthcare, 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.

“Kolmar Korea would likely satisfy the estimated value that ranges from 1.5 trillion to 2 trillion won, considering what was talked in the preliminary meeting,” said an industry source, adding “[CJ Healthcare] is very much likely to be able to get its deal through in the market due to its high profitability and growth potential.”

CJ Healthcare is expected to hire two to three bookrunners for its IPO given the size of the planned deal.

(By reporter Lee Kyung-ju)