China-based Rong Yu Pharmaceuticals is seeking to become the first traditional Chinese medicine firm to list on the Australian share market.
It wants to raise $20 million in a public offer of 100 million shares at 20 cents each, giving it a market capitalisation of $75 million to $80 million.
Rong Yu is involved in the development and sale of two prescription and three over-the-counter Chinese medicines for the treatment of cholesterol, women's anaemia, irregular menstrual periods, poor blood circulation, poor liver function, and pain.
Its key products - manufactured in Fuzhou City in China's Jiangxi province - are distributed and sold in 28 China provinces through more than 300 wholesale distributors.
Chairman Rodney Hannington says listing on the Australian Securities Exchange would help it gain Australian regulatory approval for some of its products, raise money to grow its own raw materials and expand in China, and capitalise on demand for traditional Chinese medicine products in Australia and elsewhere.
"We think Australian consumers understand the growth of China, and we think Australian investors understand the health supplements area, so (Australia) is a logical place for us to raise money," he said.
"Secondly, we also want to register our cholesterol-lowering and women's health products with the TGA (Therapeutic Goods Administration) in Australia, and use that registration footprint to start exporting to other countries as well.
"China's a big market for us, and it's our number one priority, but to have an English (language) product referenced out of Australia gives us a good footprint to export."
He said there was nothing "weird" in Rong Yu's medicines - the products were already registered with the China Food and Drug Administration and had been shown to be effective.
"I think Australia consumers need to overcome the perception that herbal products don't work," he said.
He said Chinese consumers were now also buying western products such as vitamin tablets and supplements, but the traditional Chinese medicines market was far bigger.
"Traditional Chinese medicine is a $500 billion category, and it is the biggest category in terms of health treatment and health management," he said.
Rong Yu - generated a net profit of $19 million on revenue of about $71 million in fiscal 2017 - intends to uses some of the IPA proceeds to buy farmland to grow some of the herbs used in its products.
Founder Rongyu Ye will hold 51.6 per cent of the company, assuming that the maximum $20 million in new shares is taken up.
Rong Yu hopes to start trading on the ASX on December 22.
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