Alibaba’s health unit has kicked off an upsized follow-on offering worth $1.3 billion in Hong Kong,
Alibaba Health Information Technology (HKEX: 0241), listed in Hong Kong a decade before the IPO of its parent Alibaba Group (NYSE: BABA; HKEX: 9988) in 2014, saw its shares slip nearly 3% Wednesday, to HK$21.25 apiece.
That followed the company’s pricing of an offering of 498.8 million shares at priced at HK$20.05 per share – the low end of the HK$20.50 range. That’s a 8% discount from Tuesday’s close.
The follow-on offering occurs as Alibaba Health saw a doubling of its stock this year, riding the uptrend that health stocks enjoyed amid the Covid-19 outbreak and the continuing search for an effective cure or treatment.
According to the South China Morning Post citing a person familiar with the matter, the offering was oversubscribed “multiple times.”
Securing agents on the follow-on offering is Citigroup Global Markets and Credit Suisse (Hong Kong) Ltd.
Alibaba Health said in its filing it will use the majority of the proceeds for the development of its “omni-channel business and medical and healthcare services business, including, but not limited to, expanding the Group’s pharmaceutical and medical services network, enriching member services and user-focused content.”
Another portion will be used for the digital infrastructure and IT solutions the company provides in the healthcare sector.
In the filing, Alibaba Health noted the regulatory policies promoting internet healthcare, which it said led it to enter a “new track of accelerated development.”
Alibaba Health provides pharmaceutical e-commerce services. As of March 31, it reported cash and cash equivalents of 2.6 billion yuan. For the twelve months through March, it posted revenues of 9.6 billion yuan, a 92% year-over-year growth. Net loss for the year was 15.7 million yuan, according to its annual report.
During the outbreak, the company launched new programs including Live Q&A with Medical Practitioners, Psychological Assistance Hotline, AliHealth Online Doctor for Beijing, and Medicine Home Delivery service, among others.