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Cipla Quality Chemicals has started the process to launch an initial public offering (IPO) that will see the drug make float more than 657 million shares.The process, which started on July 26 is expected to end on August 9, after which the company will announce the price of its IPO shares and the money it intends to mobilise.


The IPO comes after a six-year drought since Umeme (UMEM) listed on the Uganda Securities Exchange (USE) in 2012.


It will bring the number of locally listed companies on USE to nine. Currently, USE has eight locally listed stocks and eight cross-listed companies – all from Kenya.


The company, according to the prospectus that has been sent to the Capital Markets Authority for approval, hopes to put on offer more than 657 million shares, through which the public will own a share of Uganda’s largest pharmaceutical firm.


Renaissance Capital will be the lead transaction advisor while Crested Capital will be the lead sponsor for the IPO that is expected to mobilise at least Shs100b, according to sources familiar with the process.

Cipla Quality Chemicals, according to the prospectus, is currently conducting a book building process that will inform its final figures and decision.


The company is currently owned by a consortium of investors. At 62.3 per cent, Meditab Holdings holds the largest stake.


The Indian drug maker and biotechnology company, which sells under the Cipla trading name hopes to hold 51 per cent after the IPO.


Other shareholders include Capitalworks Investment Partners (14.4 per cent), TLG Capital, which intends to sell part of its 12.50 per cent stake and Mr Emmanuel Katongole, who holds 3.6 per cent.


Mr Katongole, the Cipla Quality Chemicals chairman and a founding director, hopes to reduce his shareholding to 1.80 per cent after the IPO.


Mr Frederick Mutebi Kitaka and Mr George Baguma are also expected to reduce their respective shareholding from the 3.6 per cent they currently hold. Mr Katongole yesterday told Daily Monitor they will begin discussing particulars of the intended IPO on Monday, declaiming to divulge into details.


In 2004, Quality Chemicals partnered with Cipla and the government of Uganda to form a joint venture that would later establish one of the largest pharmaceutical industries in East Africa.


The government of Uganda in 2010 divested from the drug manufacturer, selling its stake to Cipla Quality Chemicals at a transaction that was valued at about $5m (Shs18.7b).


Mr Keith Kalyegira, the Capital Market Authority chief executive officer, yesterday said the IPO indicates growing confidence in Uganda’s equity markets, which has afforded the public to own a share of some of Uganda prime companies.


“The more people believe the more we shall see investor participate. It is a very strong confidence move that [Cipla Quality Chemicals] has taken,” he said.


Companies, he said, are increasingly finding relevant to mobilise cheap resources through the stock exchange instead of resorting to banks, whose interest rates are increasingly becoming volatile.

 


About Cipla Quality Chemical

Cipla Quality Chemical is a pharmaceutical manufacturing company. According to a 2007 published report, it was the only company in Africa that manufactured triple-combination antiretroviral (ARV) drugs.


It also manufactures the antimalarial drug Lumartem, containing artemisinin and lumefantrine and the hepatitis B generic medicines Texavir and Zentair.


In 2011, Cipla Quality Chemical announced a $40m (Shs148b) expansion of the production line to include increased production of antiretroviral and antimalarial medication. Cipla Quality Chemical has received approval of its processes and products from the World Health Organisation.


The products were expected to be initially marketed in Burundi, the DR Congo, Kenya, Rwanda, South Sudan, Tanzania, and Uganda.

 

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