HONG KONG -- Prenetics, the Hong Kong-based COVID-19 test provider that helped English football's Premier League resume matches, is planning an initial public offering as early as this year and is on track to close a $100 million pre-IPO funding round in the first quarter, according to people familiar with the discussions.
The latest fundraising by the 7-year-old startup backed by Jack Ma's Alibaba Hong Kong Entrepreneurs Fund will value it between $800 million and $900 million, a person familiar with the round said. This compares with a valuation above $300 million as of the company's last funding round in September.
In an exclusive interview with Nikkei Asia, Prenetics co-founder and CEO Danny Yeung said Adrian Cheng, chief executive of Hong Kong conglomerate New World Development, will join the ongoing round.
"We've been in talks with various investors and this [funding] round is actually oversubscribed," Yeung said. "So we are looking for strategic investors who can help our business" enter new markets and expand its connections, he said.
While Yeung did not comment on IPO plans, he said the company is "always exploring different opportunities." Most of the new money from the funding round will be used for research and development, including acquiring companies with technologies that enhance Prenetic's products.
A spokesperson for New World confirmed that Cheng had made an investment in Prenetics.
"He has done so in the hope that making more portable COVID-test kits available to the market will be effective in slowing the spread of the pandemic, and benefit millions of people across the globe as well as global economies -- especially markets like Hong Kong that rely on incoming business travelers and tourists," the spokesperson said in an email to Nikkei.
In November, Prenetics acquired Oxsed, which had developed a rapid COVID-19 testing platform based on research from the U.K.'s Oxford University. Under the deal, Prenetics and its U.K. unit have exclusive global rights to the Oxsed technology.
Prenetics is in talks to select underwriters for the offering, which would also allow its 12 venture capital and private equity investors to sell a part of their stake.
"The business has seen tremendous momentum and awareness with the COVID-19 testing success," one of the people said. "It is a ripe time to tap the wider investor interest."
Prenetics grew rapidly in the past year after swiftly pivoting to offer COVID-19 testing kits on top of its core genetic testing services.
Whether its business will lose growth momentum in the post-COVID era is "the most frequently asked question" from investors, Yeung said, adding that he believes the trend is "here to stay" as the pandemic has raised people's acceptance toward testing in general.
With the incoming funds, Prenetics will work on developing 30-minute home test kits for cancer, HIV and other infectious diseases. "This is potentially a multibillion-dollar market," Yeung said.
The company will most likely aim to debut as early as the third quarter of the year, though it may look at options to list sooner, one of the sources said.
Prenetics will join a host of companies going public in Hong Kong, which was the second-largest new listing destination globally last year, behind Nasdaq in the U.S.
Already this year companies have raised $8.4 billion in Hong Kong, according to Dealogic. More, including search engine major Baidu, Tencent Music, ByteDance's short video app Douyin, and Bilibili, another Chinese video app, are said to be lining up for listings in the city.
Prenetics is looking at several options to go public. While the first choice remains a debut on Hong Kong's main board, the company is aware it may not meet the profitability requirement for a listing, two of the sources said. Still, the company can go public without profits if it can achieve the required revenue and market capitalization.
It is also considering the Growth Enterprises Market Board in Hong Kong, where listing rules are not so strict, or listing through a special purpose acquisition company -- a "blank check" shell corporation. Already this year, $44 billion has been raised for SPACs, or more than half the 2020 tally.
Prenetics turned a full-year profit in 2020 on the back of a coronavirus-testing boom, however, the company is not going to be profitable in the next three years as it continues to invest in research and development, Yeung said. In the past year, it has added over 100 employees to its 300-plus workforce, which operates out of 10 countries.
While Yeung declined to disclose revenue figures, one source said the company has more than doubled revenues in each of the past two years.
The company has so far conducted over 1.5 million COVID-19 tests with a turnaround time as short as 15 minutes. Its other clients include the Hong Kong International Airport, the Hong Kong government and several airports in the U.K., including Heathrow.
Yeung said the company hopes to expand COVID-testing services to airports across the globe to facilitate emerging "travel bubble" arrangements.
Prenetics was founded in 2014 and focused on genetic testing and digital health. It has so far raised $60 million through several rounds of funding.
Its investors include Indonesia's Lippo Group-backed Venturra Capital, Hong Kong-based venture capital investor Beyond Ventures, Yuantai Investment Partners and Ping An Ventures, the venture capital arm of Ping An Insurance Group. Former England and Manchester United football star Rio Ferdinand is also an investor.
Prenetics, which has performed over 400,000 DNA tests, experienced a business acceleration after it ventured into COVID-19 testing. Last year it signed a contract with the EPL to provide up to 40,000 tests for players and staff, which was instrumental in matches restarting in June after the season was interrupted by the pandemic.
The company, which operates three community testing centers in Hong Kong, also helped test 200,000 workers at 16,000 restaurants, supermarkets and wet markets. It was the only Hong Kong-based company selected for the government-sponsored COVID-19 testing program.
Additional reporting by Kenji Kawase.