Eastgate Capital Group, the private equity fund management arm of NCB Capital of Saudi Arabia, has invested USD40m in exchange for an influential minority stake in Sigma Pharmaceutical
Eastgate Capital Group, the private equity fund management arm of NCB Capital of Saudi Arabia, has invested USD40m in exchange for an influential minority stake in Sigma Pharmaceutical Industries, a generic pharmaceutical company based in Egypt.
The investment is in the form of a capital increase to enable Sigma to expand into other regional markets, including Saudi Arabia, Algeria, and Sudan.
It represents the second investment of Eastgate Mena Direct Equity fund and the first in the healthcare sector, a key target sector for the fund.
Eastgate says that within the healthcare sector, the generic pharmaceutical industry demonstrates attractive growth and profitability, while maintaining a defensive and resilient profile that is relatively more immune to economic cycles.
It adds that Egypt represents one of the largest and fastest growing pharmaceutical markets in the Mena region, growing in value on average at approximately 15 per cent per annum over the last eight years.
Established in 1998, Sigma is currently ranked tenth in the Egyptian pharmaceutical market in terms of sales and is one of the fastest growing and most profitable pharmaceutical companies in Egypt.
In 2008, Sigma had revenues of over EGP340m, representing 44 per cent growth over the previous year. In 2008, Sigma launched its state-of-the-art manufacturing facility, Sigmatec, one of the largest and most advanced sterile manufacturing facilities in Egypt.
Eastgate will work with Sigma management and stakeholders to support the growth and regional expansion plans of the company, help institutionalize the business, and assist in building a strong foundation for a regional profile.
Dr Ghazi Al-Rawi (pictured), a founder and managing partner of Eastgate Capital Group, says: ‘Based on our internal analysis and research, we have developed strong interest in the regional healthcare sector and the generic pharmaceutical industry in particular, which not only offers attractive upside but also resilience to economic down turns. Given its distinctive attributes, performance, and management team, Sigma offers us a unique opportunity to tap into the high-potential Egyptian and regional generic pharmaceutical markets. We are very delighted to be investing in such an exciting business, and look forward to working with our partners in Sigma to support the ambitious growth plans of the company and transform it into a regional player.’
Dr El Sayed El Badawy Shehata, the founder, chairman and chief executive of Sigma, says: ‘We are very proud of our accomplishments at Sigma over the last eight years. This transaction will strengthen our capital base and enable us to take advantage of local and regional growth opportunities. We are very pleased to partner with Eastgate and believe that Eastgate brings a wealth of valuable expertise to Sigma. We believe that the timing of this transaction represents a vote of confidence in Egypt as an ideal investment destination and the pharmaceutical sector in particular as a promising sector.’
