Temasek-backed dental group Arrail files for Hong Kong IPO

Signage for HKEx, Hong Kong’s stock exchangeSignage for HKEx, Hong Kong’s stock exchange

Arrail Group, a China-based dental service provider which counts Singapore state-owned investment company Temasek Holdings among its backers, filed on Thursday for a Hong Kong initial public offering (IPO).

In April, Arrail Dental Clinic raised US$200 million in a series E round led by Temasek, with other participating investors including Industrial Bank of Korea, The Hina Group, Ward Ferry Management, Mirae Asset Global Investments and OrbiMed, according to Crunchbase data.

Temasek’s investment is held under indirect, wholly owned subsidiary Elbrus Investments, which held an around 10.88 percent stake or 2.33 million series E preferred shares, the prospectus said. The size of Elbrus Investments’ stake post-IPO, was estimated around 58.24 million shares, but the percentage that might represent was redacted from the prospectus.

The prospectus said other investors include Goldman Sachs, New Horizon, KPCB and Qiming Venture Partners. Other substantial shareholders listed in the prospectus include Total Success Investment, Stonebridge 2017 (Singapore) and HH AGL Holdings.

Arrail, founded in 2001, is the largest premium private dental services provider in China based on revenue in 2020, Arrail said, citing Frost & Sullivan data, and also the third-largest private dental services provider on the mainland by revenue for that year.

The company operates under two brands, the premium Arrail Dental, which has 50 clinics mainly in Tier-1 cities as of end-March, and the mass-market Rytime Dental, which operates seven dental hospitals and 50 dental clinics, mainly in Tier-1 and Tier-2 cities, as of end-March, the prospectus said.

Arrail posted revenue of 1.08 billion yuan in fiscal 2019, 1.1 billion yuan in fiscal 2020 and 1.52 billion yuan in fiscal 2021, but posted a net loss of 597.8 million for fiscal 2021.

Temasek has previously said it has four key themes for its investment philosophy: transforming economies, growing middle income populations, deepening comparative advantages and emerging champions. The company also chooses investments along structural trends of longer lifespans, rising affluence and sustainable living, as well as for sharing economies and smarter systems.