Goldman Sachs poised to stage another IPO feat in China
Staff Reporter 2013-08-14 12:24
Goldman Sachs' logo. (Photo/CFP)
Thanks to the manipulation of Goldman Sachs, the share price of Shenzhen Hepalink Pharmaceutical Co, owned by Li Li, one of the richest people in China, shot up in the wake of its IPO three years ago. The price surge enabled Goldman Sachs to pocket 1.8 billion yuan (US$294 million) from its initial investment of 37 million yuan (US$6 million), representing a return of over 49 times on its investment. With the subsidence of the initial investment craze, share price of Hepalink, however, have plunged, resulting in heavy losses for some of its other investors, reports the Chinese-language Money Week magazine.
Goldman Sachs managed to jack up Hepalink's share price by successfully transforming the image of the company from a common manufacturer of bulk pharmaceutical chemicals to a supplier of bulk pharmaceutical chemicals featuring monopolistic business, advanced technology, high market share, and high growth potential, with authoritative US certification, the paper said.
Meanwhile, an insider told Money Week, "In retrospect, we cannot help but doubt that all the sales and overseas orders of Hepalink were arranged by Goldman Sachs." In order to repeat its success in investing in Hepalink, Goldman Sachs has also invested in Shenzhen Techdow Pharmaceutical Co and another domestic pharmaceutical firm, both privately held and controlled by Li Li.
Insiders said that over the past three years, related trading between Hepalink and Techdow has increased gradually, adding that Li Li appears to be boosting the performance of Techdow by investing in resources and manpower and even allowing Techdow to utilize the manpower and resources of Hepalink, which seems to involve a transfer of benefits. Last year, Techdow purchased 55.7 million yuan (US$9.1 million) of bulk pharmaceutical chemicals from Hepalink accounting for 3.2% of the latter's sales, up from 20.3 million yuan (US$3.3 million) or 0.9% in 2009.
Goldman Sachs has solicited the participation of renowned investment firm IDG and another former partner in the Hepalink maneuver in a bid to profit out from Techdow. Founded in 2004, Techdow has a registered capital of 6 million yuan (US$980,300), produces liver medicine and is a downstream firm of Hepalink.
Hepalink and Techdow appear to be two departments of the same company, as they are both run by Li Li, have the same management team, and executives often work for both of the companies, the Money Week said. Presently, Techdow has some 300 employees on its payroll, compared with 1,000 of Hepalink.
