Now Cipla Quality Chemicals to list on USE

Analysts anticipate some buzz on market that last had listing in 2012

Kampala, Uganda | JULIUS BUSINGE | Uganda’s Securities Exchange market is set to experience some new buzz again as the long awaited drug maker, Cipla Quality Chemical Industries Ltd (CiplaQCIL), makes an Initial Public Offering this month.

The company said in a statement dated August 02 that its shareholders will be reducing their stake as part of its growth strategy.

“Each of the shareholders will be selling a minority of their stakes to enable sufficient free float and liquidity; Cipla Group, represented through a subsidiary will retain a majority stake,” the notice reads in part.

The Indian-based Cipla Group owns a 62.3% stake in the company, followed up with Capital Works Investment Partners and TLG Capital that owns 14.4% and 12.5% respectively.

Local investors – Emmanuel Katongole, Frederick Mutebi Kitaka and George Baguma – hold a stake of 3.6% each.

The company said the listing has received relevant approvals required and that it plans to provide further details soon.

Though the company could not divulge further details of the planned IPO, available information indicates that it plans to sell 31% stake through the sale of 657million shares. This is intended to raise at least Shs100bn.

Renowned market firms, Renaissance Capital is acting as the lead transaction advisor and book runner while Crested Capital (Uganda) is the lead sponsoring stockbroker to the listing.

This announcement comes amidst several calls amongst market experts to have a carefully designed campaign aimed at sensitising members of the public and investors on the benefits of listing and trading in company shares.

It also comes at a time, the capital markets regulator, the Capital Markets Authority (CMA) current master plan is recommending to government to engage companies in key sectors of oil and gas and services sector to list so that Ugandans can have a share in them in addition to having them attract high profile investors from oversees to benefit the entire economy.

Currently the USE has 16 local and regional companies listed and few counters record market activity during days of trading. Power distributor Umeme Limited was the last to list on the market in 2012.

Company strength

Market analysts are not predicting yet on whether or not the company would be a good buy with many waiting to look at the performance of the company detailed in a technical document referred to as a prospectus.

However, available information shows that the company that started in 2005, with more than US$200million worth of investment, sits on 12 acres of land with a factory area of 11,800 square meters.

The company focuses on the production of World Health Organisation (WHO) pre-qualified anti-malarials, anti-retrovirals and Hepatitis B drugs for the Sub-Saharan African region including Uganda, Kenya, Rwanda, Tanzania, Namibia, Ivory Coast, Zambia, Zimbabwe, Malawi, Namibia, Mozambique, Ghana, Ethiopia, Angola and South Sudan.

Although the company has the capacity to produce 70 million tablets a month, it is currently producing at 65-70 % capacity due to instability in demand for drugs.

The Capital Markets Authority remained tight lipped on the planned offer. USE Chief Executive Officer, Paul Bwiso, said, “ It is an exciting time for the Uganda capital markets that last had an IPO in 2012 and we applaud CiplaQCIL for taking this important step in its growth story.”

Joseph Kibuuka, the head of investment banking at Crested Capital told The Independenton Aug. 04 that he was not authorised to talk about the transaction but said, any new listing that is of good quality on the USE is a good addition and would boost market activity.

He said there is need to run aggressive sensitisation campaigns with messages on the benefits of investors taking part in the capital markets.