The drugmaker Cipla Quality Chemical Industries Limited, controlled by the Indian pharmaceutical giant Cipla Limited, will become the ninth domestic company to list on the Uganda Securities Exchange next month, according to a preliminary prospectus of the company.
The prospectus reveals that the firm plans to sell an 18% stake in the company, which will be increased to 20% within 24 months after the initial public offering. The company’s board and shareholders agreed to tender 657,179,319 of the company’s 3,651,909,200 shares. With the firm’s authorised share capital currently at Shs45,648,865,000, it means that the issued shares are valued at Shs3,651,909,200 or Shs12.5 per share.
Emmanuel Katongole, the company’s executive chairman, said the offer “is a sale of shares by the selling shareholders” and is not aimed at raising capital. “The Company is well capitalised, is cash generative and has sufficient resources to self-fund its growth and, as such, does not anticipate the need to raise any primary capital at this time,” Mr Katongole said in a statement published in the prospectus.
The offer shares will comprise shares offered by Cipla EU, a United Kingdom subsidiary of Cipla Ltd, Capitalworks, a South African private equity firm, the three Ugandan founders, and Amistad, a Mauritius-registered company controlled by TLG Capital. Cipla EU is to sell all its shares, currently 11.25% of the company’s issued shares, while Capitalworks will see its stake reduce to 11.11% from the current 14.4%. Amistad’s stake will reduce by 1% to 11.50% after the offer.
The three Ugandan founders – Emmanuel Katongole, George Baguma, and Frederick Mutebi Kitaka – will each own 2.78% after the offer, from the current 3.60% each. Only Mediatab, a Mauritius-registered company wholly owned by Cipla Ltd, will retain the same stake, 51.05%, it currently owns after the initial public offering.
A preliminary prospectus is filed by a firm with the securities industry regulator before its initial public offering and is “intended to provide pertinent information to prospective shareholders about the company’s business, managers, strategic initiatives, financial statements, and ownership structure.”
The document is issued before the offering price is determined by the underwriter. The price will be determined after the book building process – in which the underwriter tries to determine the IPO price based on the demand of the shares from institutional investors – and will be included in the final prospectus, which is expected to be published on 10 August.
According to the preliminary prospectus, the book building for Cipla Quality Chemicals opened on 26 July and will close on 9 August. The IPO will open to retail investors on 13 August, allowing them to take part in the offer, and will close on 24 August. The company expects to be admitted to listing and trading on the USE on 24 September.
The Kenyan subsidiary of Renaissance Capital, the investment bank, is the lead advisor on the transaction as well as the sole underwriter, while Bowmans (AF Mpanga Advocates) was retained as legal counsel.
Other advisors are Ernst & Young Limited as reporting accountants, Standard Chartered Bank as the receiving bank, and C&R Group as registrar of the company. Crested Capital is the transaction’s lead sponsoring broker.
However, as is spelt out in the prospectus, those dates could be amended and extended if Cipla Quality Chemicals, the Uganda Securities Exchange, and the Capital Markets Authority agree.