Mauritius investment firm buys Cipla Uganda

A Mauritius-based investment firm is buying a controlling stake in Cipla Quality Chemicals Industries Limited (CQCIL), the largest pharmaceutical in East Africa based in Uganda. 

CQCIL said in a notice to investors on March 15 that Africa Capitalworks would acquire 51.18% stake of the drug major upon completion of all regulatory conditions. 

Africa Capitalworks is a wholly owned subsidiary of Africa Capitalworks Holdings (ACW), an investment management company incorporated in Mauritius.

ACW is an investment company that provides permanent equity capital and complementary skills to mid‐market companies across Sub‐Saharan Africa.

“ACW has entered into a sale and purchase agreement with Meditab Holdings and Cipla (EU) Limited dated March 13, 2023. In terms of the sale and purchase agreement, Meditab and Cipla (EU) Limited have each agreed to sell their ordinary shares in CQCIL to ACW and ACW has agreed to purchase such shares,” the firm said in the notice. 

Currently, Meditab Holdings owns 51.05% or 1,864,299,646 shares in CQCIL and Cipla EU Limited holds 0.13% or 4,871,038 shares. As part of the deal, the company will maintain CQCIL listing on the Uganda Securities Exchange (USE). 

About 657,179,319 shares were floated on the USE by CQCIL during its overly subscribed initial public offering (IPO) in 2018, with each share going to sh256.5. 

However, over the last four years, the firm has seen its stock price nose-dive to sh60 as of writing this article on March 15,  trend market observers have linked to the company performance over the period. 

The steep drop represents a 77% loss in capital for Ugandan IPO investors. In 2022, the board directors of CQCIL proposed to pay shareholders sh2 per share for the financial year ended March 2022. This was the first time the rewarded shareholders with dividends since it went public.  

CQCIL performance in 2022

CQCIL reported a 393% surge in profits after tax for the six months’ period ended September 2022.  

The growth in profitability was linked to successful collection of the government of Zambia debt, early repayments of loans and reduced cost of sales during the review period. 

According to CQCIL financials released on November 4, the cost of sales reduced by 12.37% to sh83.5b driven by lower raw material costs and improved factory efficiencies.