Africa-focused private equity firm, 54 Capital, is investing $42 million to take a significant minority stake in Addis Pharmaceutical Factory or APF, a leading pharmaceutical manufacturer in Ethiopia. The investment will be made in two tranches—an initial investment of $30 million with an option to invest an additional $12 million—and the capital will be used to expand the company’s domestic and international market penetration by broadening its product portfolio, improving its production capacity and obtaining a WHO certificate.
54 Capital now has 3 board seats as part of the deal, which will be taken by Saad Aouad, 54 Capital’s Chief Investment Officer, who led the investment. Joining him are the private equity’s pharmaceutical expert and a member of the firm’s Addis-based team.
Commenting on the investment, APF’s General Manager Shimelis Mamuye said “As the Ethiopian market leader within the pharmaceutical sector we are proud to be partnering with international experts to move to our next stage of growth and development in line with the country’s growth ambitions. We believe that we have a fundamental role to play in the development of the pharmaceutical sector in Ethiopia…”
The pharmaceutical sector in Ethiopia is expected to grow at about 15% per annum over the next three years to reach a total value of US$1 billion by 2018. With headquarters in Adigrat, Northern Ethiopia, APF manufactures a significant number of high quality products across different therapeutic categories that it supplies primarily to the Ethiopian market. APF intends to use the investment proceeds to enhance all aspects of its business; working in collaboration with a team of international experts to boost its production capabilities, implement best pharmaceutical manufacturing practises, and set the standards for high quality pharmaceutical manufacturing in the region.
To date, 54 Capital has invested approximately $35 million in Ethiopia’s FMCG sector, acquiring majority stakes in companies selling food and beverage products and services, including one of the largest private equity deals in Ethiopia, the $90 million growth investment in Dashen Brewery, the country’s only remaining independent brewery, in 2011.
Patrick Larrivé and Benôit de Monval of Dentons and Mesfin Tafesse and Yemisrach Tassew of Mesfin Tafesse Law Office provided legal advisory services to 54 Capital on the transaction. Yared Berhane led the team from EY advising APF.