Six facts about Samsung BioLogics $2 billion IPO

Samsung BioLogics Co Ltd – the biotech manufacturing arm of Samsung recently said its initial public offering could raise $2 billion which would make it South Korea’s third-largest.

Here are six facts you need to know:

1. Strengthening pharmaceuticals

The Samsung Group is looking to strengthen its biopharmaceutical and drugs businesses as a new source for growth as the smartphone space becomes increasingly competitive. The offering is aimed at funding a radical production expansion which will eventually make BioLogics the world's largest contract manufacturer of biotech medicines.

2. Supporting ‘biosimilars’

Samsung’s IPO will also raise more capital for its unlisted unit - Samsung Bioepis - which aims to beat rivals to market with its lower-cost copies of top-selling drugs, known as ‘biosimilars’.

3. Meeting demand

Speaking to Reuters, Kiwoom Securities analyst Kim Joo-yong said: "The company specialises in monoclonal antibody drug manufacturing, and almost all the blockbuster drugs such as Humira, Enbrel, Remicade and Herceptin that will see strong biosimilar demand are monoclonal antibody products."

4. Share offering

The offering of 25 percent of the company is expected to consist of a new share issue of 11 million shares and the sale of 5.5 million existing shares by Samsung Electronics Co Ltd. With an indicative pricing range of 113,000 won-136,000 won per share, it is expected to raise as much as 2.25 trillion won ($2 billion). The upper end of the price range would also value BioLogics as South Korea's 30th largest publicly traded company.

5. Factory investments

BioLogics announced that 780 billion won of the proceeds will be used to invest in its factories, although whether it will be used to construct new sites or improve existing ones is yet to be seen.

6. Ownership

Samsung Electronics is the second-largest shareholder in BioLogics after Samsung C&T Corp (028260.KS), the de facto holding company for the Samsung Group. C&T and related shareholders will own 74.93 percent of the company after the listing.

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