Analysis: Prenetics in a $1.25bn reverse merger

China-based genetic testing services provider Prenetics, which counts e-commerce group Alibaba and insurance firm Ping An among its previous backers, has agreed to complete a reverse merger with special purpose acquisition company Artisan Acquisition Corp. The transaction is expected to value Prenetics at about $1.25bn. Prenetics will take over Artisan’s place on the Nasdaq Capital Market, which the Spac had secured through a $399m initial public offering in May 2021. In addition, the reverse merger is supported by a $120m private investment in public equity (PIPE) transaction backed by Indonesia-headquartered conglomerate Lippo, Aspex Management, PAG, Dragonstone, Xen Capital and other undisclosed investors. The Spac, Artisan, was set up by Adrian Cheng, CEO of property conglomerate New World Development, and will provide Prenetics with access to Cheng’s network across the retail, hospitality, healthcare and property sectors.

Founded in 2009, Prenetics had initially started as a provider of at-home DNA and blood testing services but pivoted to covid-19 testing during the pandemic. The company claims to have conducted over 5 million tests around the world and plans to expand its screening services to other infectious diseases as well as colorectal cancer.

Prenetics is part of the broader genetics and gene therapeutics space, which has enjoyed much attention from corporate investors over the past few years and there have been same exits in previous years, as our GCV Analytics bar chart below illustrates. In 2020, however, we tracked 11 exits from this space, with a notable spike in the total estimated dollars in them at $10.9bn, up from $1.11bn in the previous year. In 2021, by the beginning of September we had already tracked 13 such exits, worth an estimated total at $4.46bn. This suggests, much like in other domains, a significant upward pressure in valuations, which – if sustained, should benefit corporate investors who had committed capital in this space and we should continue to see more exits.