Novo, GIC back Singapore lab firm in US$200 million funding round
SINGAPORE (BLOOMBERG) – Esco Lifesciences Group, a Singapore firm that pivoted from washing lab gowns to making high-tech equipment, has raised US$200 million (S$265 million) from some of the world’s biggest healthcare investors, paving the way for a possible listing in Hong Kong this year.
The funding round led by Danish investment giant Novo Holdings and US investor Vivo Capital also included Chinese sovereign wealth fund China Investment, according to a statement from Esco.
Other new backers include Singapore’s GIC, with the fund raising giving the company a valuation of US$800 million, according to people familiar with the matter. The sources asked not to be identified as the details are not public.
Esco is betting it can use the city state’s neutral status to acquire equipment makers across Asia, Europe and North America, while chief executive Lin Xiang Qian is separately funding the development of medical treatments.
Singapore biotechnology and life sciences firms are raising money to help broaden the country’s economy from a finance and trading hub to an innovator in the global healthcare space.
“We see the opportunity to become a platform for industry consolidation in this segment between East and West,” Mr Lin said in an interview, adding that partnerships in China are also possible.
Esco declined to comment on GIC’s participation in the Series A round or its IPO plans. A spokesman for GIC declined to comment.
Esco was founded by Mr Lin’s parents in the late 1970s to sell disposable products, build so-called clean rooms for labs and offer laundry services for the country’s burgeoning electronics makers.
But by 2000, the production of hard drives and semiconductors was shifting elsewhere and the family faced a choice – move up the food chain to produce lab equipment or shift gears to become yet another property developer.
They chose the former, yet struggled to build their brand and supply chains. Their high-tech products had rarely been offered by Asian vendors before, let alone from tiny Singapore.
“I remember talk of possibly selling the condominium and mum saying she might have to work as a pharmacist again or get a regular outside job,” Mr Lin recalled. “As an adolescent, you don’t know the whole story of what’s going on, but you see your parents working long hours and talking over dinner about certain difficulties.”
As business got better – thanks in part to the 2003 Sars outbreak – Esco expanded internationally with factories from Indonesia and China to Europe and the US, as it rode a wave of biotech innovation.
Its bio-safety cabinets are used for handling pathogens. Its platforms assist with in-vitro fertilisation, and refrigeration units chill vaccines to super-low temperatures.
In 2020, it posted US$115 million in revenue, thanks partly to a Covid-19-driven surge. China is its largest and fastest-growing market.
Novo support
For Novo Holdings – one of the world’s largest biotech investors with more than US$75 billion in assets under management – this is a chance to back an Asian-based equipment supplier at a growth stage, according to senior partner Amit Kakar, who will join the Esco board.
Palo Alto, California-based Vivo Capital, the other lead backer, runs US$5.8 billion in assets and will also appoint a director.
The funding will be used in part to finance new facilities and expand Esco’s contract development and manufacturing division, along with bolt-on acquisitions.
Esco is preparing to list as early as this year, seeking to raise as much as US$500 million in an initial public offering, according to people familiar with the matter.
Esco is far from a sure bet. It faces fierce competition from established Western brands that have the money and the reputation to dominate the market. Chinese vendors are also improving their quality as rising domestic demand and access to cheap capital fuel research and development.
“Esco’s product line-up isn’t on the high end of the innovation spectrum. Much of this is standard lab equipment,” said Bloomberg Intelligence analyst Jonathan Palmer. “That said, I don’t see why they couldn’t compete in categories where they have an established beachhead and expand their offering over time.”
Upgrading
Mr Lin says that is a key Esco strategy: To find product niches the titans do not dominate and grow leadership there.
While the vast majority of the new money will go back into Esco Group, Mr Lin said, some of his personal funds will go into other lines of business as separate investments.
In June, Carmine Therapeutics – a business co-founded by Mr Lin and incubated by EVX Ventures – signed an agreement with Takeda Pharmaceutical to collaborate on the development and sale of non-viral gene therapies targeted at two rare diseases.
It is one of several treatment developers that Mr Lin said he plans to incubate or invest in around the world as he tries to build a global life sciences ecosystem.
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