Local pharmaceutical firm Cipla, which acquired Quality Chemicals Industries Limited, is to list on the Uganda Securities Exchange (USE) soon.
A statement from the Board of Cipla Quality Chemicals Industries Limited says as part of its growth strategy the company has been evaluating an Initial Public Offering (IPO) and listing of its issued share capital on the stock market.
The Cipla Board says each of the shareholders will be selling a minority of their stakes to enable sufficient free float and liquidity. The statement is, however, silent on when the IPO will take place. The shareholders include Cipla Limited of India with a stake of 62.3 per cent, Capital Works Investment Management with a 14.4 per cent, TLG Capital with 12.5 per cent.
Three Ugandan individual shareholders, namely Frederick Mutebi Kitaka, George W. Baguma and Emmanuel Katongole, collectively hold 3.6 per cent in Cipla. It is not clear who owns the remaining 7.2 per cent of the shares.
Sources say the IPO might have been triggered by one of the hedge funds, Capital Works Investment Management, wanting out of the company.
The statement adds that Cipla Group, an Indian pharmaceutical firm represented through a subsidiary, will retain a majority stake in the company. The Indian pharmaceutical firm, valued at over $2bn, acquired 51 per cent stake in Quality Chemicals in 2015.
According to Cipla Quality Chemicals Limited, the planned listing has received the relevant approvals required, and the company will provide further details soon.
It says Renaissance Capital is acting as the lead transaction advisor and book runner, while Crested Capital (Uganda) is the lead sponsoring stockbroker to the listing.
Paul Bwiso, the chief executive of Uganda Securities Exchange, says in a statement that the Cipla announcement “is an exciting time for the Uganda capital markets that last had an IPO in 2012”.
Bwiso applauds CiplaQCIL for taking this important step in its growth story. If listed, CiplaQCIL will join 16 other listed companies on the stock market.
Local companies on the bourse are Umeme, Stanbic, Bank of Baroda, New Vision Group, DFCU Bank, Uganda Clays, British American Tobacco Uganda and National Insurance Corporation.
Companies cross-listed from Nairobi Stock Exchange are East African Breweries, Kenya Commercial Bank, Equity Bank, Kenya Airways, Nation Media Group, Uchumi, Jubilee Holdings, and Centum Investment.
CiplaQCIL has a pharmaceutical plant based in Kampala that produces World Health Organization (WHO) pre-qualified, life-saving anti-malarial, anti-retroviral and Hepatitis B and C drugs targeting Sub-Saharan Africa.
According to CiplaQCIL, its drugs have been approved by regulatory authorities in 19 countries. These include Uganda, Kenya, Rwanda, Tanzania, Namibia, Ivory Coast, Zambia, Zimbabwe, Malawi, Namibia, Mozambique, Ghana, Ethiopia, Angola and South Sudan.
Despite the big announcement by Cipla, market turnover at the bourse recorded a 60.3 per cent decrease to Shs 16.3 million from the last trading day. Counters that had the most activities were Umeme which traded 46.751 shares each at Shs 322 and Stanbic Bank which traded 38,052 shares each at 33 shillings.
The Cipla IPO will come as a relief for the stock market that has seen prolonged sluggish growth compared to regional peers, especially that of Rwanda.