Kampala-based drug maker CIPLA-Quality Chemicals Industries (CIPLA-QCI) plans to list on the Uganda Securities Exchange in the next four months, ending a six-year initial public offering drought at the Kampala bourse.
Telecommunications giant MTN Uganda is also exploring ways to give Ugandans a share of its business, but it is said to be still working on the best model for domestic ownership.
This news is welcome for executives of Uganda’s Capital Markets Authority, who have not seen an IPO since the listing by power distributor Umeme in 2012.
According to documents seen by The EastAfrican, Nairobi-based Renaissance Capital has been appointed as the lead transaction advisor for the CIPLA-QCI IPO, while Uganda’s Crested Capital is the lead sponsoring broker.
Both firms were unavailable to comment, but sources with the CMA confirmed that CIPLA-QCIL had submitted an application that is currently under review.
CIPLA-QCI chief executive Nevin Bradford declined to discuss the reports and asked this reporter to submit written questions. But neither did he deny the reports.
The company is understood to be engaged in book-building ahead of an official announcement in the coming weeks.
“It is really a question of when; they are testing the appetite of the market for the IPO and speaking to prospective investors. This is meant to help them firm up a few aspects of the prospectus such as the size of the offer,” an industry source told The EastAfrican.
The company had initially toyed with placing its IPO on the Nairobi Stock Exchange, but settled on Kampala because the Ugandan shilling is its primary trading currency and listing in Nairobi could have added unnecessary complications to its accounting.
Besides, the Kenyan investors it was targeting are already among the most active on the USE and they could therefore be reached without listing in Nairobi.
“Pharmaceutical companies tick a lot of boxes for offshore investors. It is a business engaged in a socially important activity whose profitability is also assured,” the source added.
A joint venture between pharmaceutical giant CIPLA and Ugandan-owned Quality Chemicals -- the former has operated in Uganda for a decade now-- owns a WHO-approved manufacturing plant for antiretroviral, antimalarial and ant-hepatitis drugs.
If CIPLA-QCI is having any butterflies about its prospects on the market, the CMA is understood to be fairly confident that the offer could be fully absorbed in Uganda, although 75 per cent of the stock on the USE is held by foreigners, with Kenyan investors being among the most active.
The EastAfrican also has it on good authority that MTN Uganda, whose licence renewal is still pending approval, plans to open up its shareholding to Ugandans.
According to a company insider, the company is looking at a phased opening with the first stage ensuring that Ugandans who have grown with the company get meaningful participation before opening up to the rest of the market through an IPO.
MTN apparently prefers a phased approach under which it would first bring Ugandan pension funds on board through a private share offer, before eventually opening up through an IPO.
Uganda has 65 pension schemes that collectively hold funds estimated at Ush10 trillion. The law allows them to invest up to 25 per cent of their funds in equity, making them a prime target for many firms trading on the USE.