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Health Care

Hong Kong tycoon's SPAC to buy COVID tester Prenetics

Deal with Adrian Cheng's Artisan Acquisition to value startup at $1.3bn

Prenetics is known for its COVID-19 screening work for the English Premier League as well as airports in Hong Kong and London. (Photo courtesy of Prenetics)

HONG KONG -- Hong Kong biotechnology startup Prenetics is set to be absorbed by a New York-listed special purpose acquisition company backed by New World Development Chief Executive Adrian Cheng.

The deal with Cheng's Artisan Acquisition SPAC will value Prenetics, known for its COVID-19 screening work for the English Premier League as well as Hong Kong International Airport and London Heathrow Airport, at about $1.3 billion, according to three people familiar with the deal.

"The valuation is not a done deal as yet," said one person with knowledge of the transaction. "They are broadly working with the valuation around that. Still, there are quite a few factors at play, including the stake that some of Prenetics' existing shareholders will hold at Artisan."

Founded by serial entrepreneur Danny Yeung, Prenetics has grown rapidly over the past year after pivoting to COVID-19 testing on top of its previous focus on genetic testing. Over the period, its workforce has expanded by about a third to around 400 staff in 10 countries.

Nikkei Asia reported in February that Prenetics was planning a Hong Kong initial public offering or a merger with a SPAC as early as 2021.

Seven-year-old Prenetics raised $100 million in February in a pre-IPO funding round, which included Cheng, at a valuation of between $800 million and $1 billion. Only five months earlier, it was valued at around a third of that level in another capital infusion.

Prenetics investors have included the Alibaba Hong Kong Entrepreneurs Fund, Lippo Group-backed Venturra Capital, Hong Kong-based fund Beyond Ventures, Yuantai Investment Partners and the venture capital arm of Ping An Insurance Group as well former Manchester United player Rio Ferdinand.

Reacting to news of the Artisan deal, the China arm of Gobi Partners, which managers the Alibaba fund, said in a LinkedIn post, "Congratulations to Danny Yeung and the Prenetics team for this achievement and milestone!"

Prenetics is expected to log revenue of about $200 million this year, according to the person who commented on the valuation. He noted Artisan, which raised $300 million in its May IPO, will need support from additional investors to complete the deal.

Another person said that Artisan beat out other bidders interested in taking over Prenetics. A spokesperson for New World said Cheng would not comment on the Prenetics deal while the testing company did not respond to queries.

Cheng's IPO for Artisan attracted $60 million in backing from both Hong Kong's Aspex Management and PAG Capital. Its stated acquisition targets include health care, consumer and technology businesses with growth potential in the greater China market.

Speaking to Nikkei in February, Prenetics' Yeung said he would invest the majority of future incoming funds into research and development, as well as acquisitions that could enhance the company's product line. Among its ongoing projects are 30-minute home test kits for cancer as well as HIV and other infectious diseases.

"COVID has fundamentally changed people's perception of testing," Yeung said, adding that home testing "can potentially be a multibillion-dollar market."

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