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WeDoctor IPO: what should you know?

Tencent-backed digital health platform WeDoctor is seeking to list its healthcare business in Hong Kong, with an up to US$10 billion IPO valuation.

Source: Bloomberg
  • WeDoctor might file for an IPO as soon as this month, says Bloomberg
  • The Chinese company’s latest valuation stands at around US$6.8 billion
  • Jefferies analysts like its ‘robust connection’ with hospitals and the government
  • However, it has heavy capex and is facing an increasingly strict regulatory environment
  • Trade an IPO - before or after the listing - with an IG account

When will WeDoctor go public?

The long-awaited Hong Kong listing of WeDoctor’s healthcare services arm could take place soon.

Bloomberg reported that the Tencent-backed company might file an initial public offering (IPO) prospectus with the Hong Kong stock exchange as early as March 2021.

WeDoctor will split its business into two parts; the healthcare operations, covering online and on-the-ground consulting, will be going public. Meanwhile, the data business, which handles personal medical records, will be spun off and kept private, Bloomberg said.

The previous plan was for the IPO to take place around end-2020 and raise about US$500 million to US$1 billion. Reuters reported in March 2020 that WeDoctor could be valued at up to US$10 billion after the listing.

Rumours of a listing began in 2018, following a financing round that year which resulted in the telemedicine unicorn being valued at US$5.5 billion at the time.

Who is WeDoctor?

The group’s business segments include healthcare, insurance, cloud and artificial intelligence (AI), diagnostics, and pharmaceutical supply chain solutions.

Jefferies analysts said WeDoctor is heading towards building a closed healthcare circuit - which involves every aspect of the industry, including patients, physicians, hospitals, pharmacies, and insurers - while leveraging AI technology.

The company’s cloud business allows partner hospitals, clinics and government to do data processing, AI diagnosis, pension management and more.

Its other strengths include its extensive government partnership projects, a ‘robust connection’ with local public hospitals, and its first-mover advantage in both public reimbursement and commercial insurance connections, Jefferies noted. Moreover, WeDoctor in 2015 built China’s first internet hospital, Wuzheng Internet Hospital, providing online diagnosis and prescription services.

However, downsides lie in its heavy capital expenditure - the majority of WeDoctor’s businesses are self-operated or self-constructed, Jefferies said. The firm is also weak in its pharmaceutical e-commerce business, the research team added.

In addition, the company is navigating an increasingly strict regulatory environment in China, following government crackdowns on internet firms, Bloomberg reported.

Who are WeDoctor’s investors?

Besides Chinese tech giant Tencent Holdings and US investment bank Goldman Sachs, other investors in WeDoctor have included Sequoia Capital China and Millennium Management.

The latter two participated in the Hangzhou-based firm’s funding round in late 2020 which raised some US$400 million and boosted its valuation to US$6.8 billion.

Global alternative investment manager Investcorp last September announced it had acquired a minority stake in WeDoctor.

In the 2018 round, life-and-medical insurer AIA Group and Hong Kong construction and logistics conglomerate NWS Holdings led the US$500 million injection.

How to trade an IPO

There are two ways to trade an IPO – before the listing, and after the listing.

Before the IPO

If there is a lot of interest in a particular IPO, IG may offer a ‘grey market’ before such IPO is held. This means you can speculate on a company’s share price before it lists. The grey market price will be based on our prediction of the company’s market capitalisation at the end of the first trading day.

With a grey market, you would:

  • ‘Buy’ if you think the market cap will be higher than the grey market price
  • ‘Sell’ if you think the market cap will be lower than the grey market price

After the IPO

Once the company has listed, there are many ways you can attempt to profit from the IPO. As with all stock markets, you will be able to:

Ready to get started? Open a live IG trading account

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