Nairobi-based Catalyst Principal Partners announced it is taking a controlling stake in Zenufa Laboratories, a Tanzanian pharmaceutical manufacturer, last week. The holding, which was undertaken through the East Africa-focused private equity managers $125 million Catalyst Fund I, was acquired from Zenufa’s founders.
As part of the transaction, Rajal Upadhyahya and Martha Osier, who both led the deal on behalf of Catalyst, will be taking seats on Zenufa’s board and have appointed three additional independent directors, thus giving a controlling position on the Board of Directors.
Commenting on the transaction, Catalyst Investment Manager Martha Osier said that “the acquisition of Zenufa represents an exciting opportunity which will benefit from the strong fundamentals driving rising demand for quality, affordable healthcare products and services”.
While additional terms of the deal were not disclosed, Catalyst Fund I aims to invest between $5 million and $20 million in its transactions, looking to generate net cumulative returns of between 20% and 25%. The Zenufa deal is the fund’s eight transaction and fits well with its strategy of backing emerging or mid-sized companies which are poised to benefit from market demand generated by East Africa’s emerging middle class.
Zenufa produces both prescription and over-the-counter-medicines for the Tanzanian market, among which are well-known brands Zanadol, Zenkof, Zn-vital and Dr. Cold. The company also develops affordable medicines for neglected diseases, impacting the improvement in health standards in Tanzania.
“Zenufa represents a platform for growth across Eastern Africa with opportunities for expanding its product range through development of cost-effective generic drugs formulations and for extending distribution channels nationwide and across the region,” said Catalyst Managing Director, Rajal Upadhyahya
The deal represents Catalyst’s fourth investment in Tanzania and the investor’s second investment in the healthcare sector following its acquisition of a stake in the Mimosa Pharmacy chain in September 2014.
Kaplan & Stratton provided Catalyst with legal advisory services on the transaction with Clyde & Co. acting as local counsel for the firm in Tanzania. Deloitte Kenya advised on financial due diligence matters. Zenufa’s shareholders were advised by CRB Legal.