Japan's Nikko Cordial Group, a securities broker controlled by Citigroup Inc, will invest up to US$50 million for a minority stake in a Chinese drug chain before it goes public.

Happy Man Group said it has sealed the deal with Nikko Cordial, which has agreed to invest US$30 million to US$50 million over the next two years. The percentage of Nikko's stake was not disclosed.

The Nanchang, Jiangxi Province-based company will use the funds to open more stores across the country. The target for this year is to roughly triple its store number to more than 300, for which 100 million yuan (US$14 million) from Nikko Cordial is already in place.

It plans to have 1,000 stores in three years.

The pharmacy-chain operator is known in China for cheaper-than-average drugs as it simplifies the sourcing procedures and buys directly from the manufacturers.

It had 120 stores last year, with sales of 1.3 billion yuan, the sixth largest in China.

Zheng Yinghua, a spokesman for Happy Man, said they plan to list as early as 2009 to raise more funds for expansion. The place of their initial public offering is not finalized yet.

The company aims to achieve sales of more than 10 billion yuan within the next five to 10 years and has plans to expand overseas.

(Shanghai Daily January 24, 2008)