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However, mandatory approvals from Capital Markets Authority and Comesa delayed for months, with the last one coming in at the end of October.
The deal, which will see Cipla dispose of its 51.18 stake in Quality Chemicals, was completed on November 14. This is according to a notice filed through Uganda Securities Exchange. However, the delay impacted contract manufacturing.
This declined by 80 percent due to “uncertainty regarding the closing of the sale” even as the company registered significant revenue growth in most customer segments.
Cipla, an India-based drug maker, acquired a majority stake in Quality Chemicals in 2015 at a reported $26m (Shs98.3b). This had been revised from a tranche consideration of $30m over a five-year payment schedule.
The drug maker, which runs different production lines including antiretrovirals and anti-malarials, among others, last week indicated the shareholding structure of Quality Chemical would effectively change.
This is after disposing of its 51.18 percent stake to Mauritius-based equity fund Africa Capitalworks.
Africa Capitalworks’ is now Quality Chemical’s largest shareholder ahead of Amistad and SCB Mauritius a/c Capitalworks SS. They both hold a stake of 11.51 percent and 11.15 percent, respectively.
Other shareholders include Government Employees Pension Fund (8.54 percent) and, National Social Security Fund (7.38 percent). Emmanuel Katongole (2.79 percent), Frederick Mutebi Kitaka (2.79 percent), George Willy Baguma (2.79 percent), Joseph Yiga (0.11 percent) and UAP Insurance – Life Fund (0.07 percent)
In the six months ended September, Cipla reported an increase in revenue by 1 percent to Shs121.2b. The increase was largely due to higher drug orders from institutional bodies and sovereign customers.
This rose to Shs5.7b and by Shs13.9b, respectively. Private sector sales rose by Shs1.7b or 52 percent. However, slow demand due to uncertainty on the transfer of shares offset the positive financial indicators.
Africa Capitalworks returns to Quality Chemical having withdrawn from the business prior to September 2018 when the company floated an initial public offering.
During the period that ended in September, Cipla reported a 74.3 percent drop in profits to Shs3.6b from Shs13.9b due to a shift in the company’s product mix.
Cipla also indicated it had fully recovered the debt due to Zambia with the last collection of Shs9.4b coming in in the period under review. They had for many years provisioned for the debt, whose recovery had taken longer than planned.
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