Shanghai Fosun Pharmaceutical Group Co. is considering spinning off its Chinese hospital business for a funding round, which could raise about 1 billion yuan ($141 million), according to people familiar with the matter.
Shanghai Fosun Health Technology Group Co., a unit of the Hong Kong-listed drugmaker, has approached potential investors to gauge interest for the funding round, the people said, asking not to be identified because the talks are private.
Deliberations are ongoing and details of the fundraising plans including the funding round and IPO could still change, according to the people. Representatives for parent Fosun Group and Fosun Pharma didn’t respond to requests for comment.
Spinning off the hospital assets is in-line with Fosun Group’s shift from buying assets to focusing on improving the value of its existing operations. One of China’s biggest conglomerates, Fosun’s broad range of businesses encompass some 100 brands and firms across sectors including retail, pharmaceuticals, health care, tourism and real estate. Such a wide scope has deterred investors who worry about a lack of focus, and that’s dragged on the valuation of Fosun’s flagship holding companies.
In addition to having separate platforms for fundraising, spinning off individual business units could also improve transparency of financial reporting, allowing investors and financiers to better appraise strategies and performances of the operations. S&P Global Ratings said in September it expects Fosun to explore listing more of its units.
Fosun International Ltd. is seeking a separate listing for its Portuguese hospital operator Luz Saude SA. The plan was approved by the Hong Kong stock exchange last month.
Fosun Health operates about 20 medical facilities in China with most of them in the wealthier coastal area, according to its website. It had a total of 6,448 beds and held nine internet hospital licenses in China as of June 30. The loss-making healthcare services unit had an operating revenue of about 3.1 billion yuan for the first six months in 2023, accounting for about 15% of Fosun Pharma’s total revenue, an interim financial report shows.
Shares of Fosun Pharma have fallen about 34% this year in Hong Kong, heading for the worst annual performance since 2018. The company has a market value of about $8.9 billion.