China National Biotech Group (CNBG), China's largest biotechnology company that controls six state-owned institutes for biological products nationwide, has been seeking to go public. The path of CNBG's proposed public listing has been a hot subject among local investment professionals for sometime and its direction is now emerging.

On May 5, share transactions of Beijing Tiantan Biological Products Shareholding Ltd., which is listed on Shanghai Stock Exchange, were suspended due to its proposed new fund raising plan. Beijing Tiantan was founded by Beijing Institute of Biological Products (BIBP), a subsidiary of CNBG, to hold most of its businesses and assets. As a part of CNBG's plan to reorganize and go public, BIBP transferred 56.27% of Beijing Tiantan's total equity to CNBG. Following this move, CNBG becomes the majority shareholder of Beijing Tiantan.

Beijing Tiantan's new funding raising plan will seek to raise around CNY 1 billion through additional share issuance. Although both CNBG and Beijing Tiantan declined to comment on how the new funds raised will be used, local experts believe that the much-needed new capital will be used to firstly expand production capacity at Beijing Tiantan's Biopharmaceutical Industrial Park in Daxing, Beijing and secondly purchase core assets from CNBG including Chengdu Institute of Biological Products, and Wuhan Institute of Biologocial Products.

An insider revealed that CNBG decided not to inject all of its core assets into Beijing Tiantan at this stage due to concerns about the current stock market climate. However, Chengdu Institute of Biological Products is reported to be the most profitable of all six institutes of biological products under CNBG and it also owns 90% of Chengdu Rongsheng Pharmaceutical Ltd. which specializes in the R&D, production and distribution of blood products with total sales of CNY 330 million in 2006.

Should the Chinese stock market climate improve in the future, CNBG is likely to move faster with its plan for going public by injecting more assets into Beijing Tiantan.