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Tuesday, 2 March 2021

Our IPO pipeline is heating up

Macro Group Pharma said overnight that it intends to to pull the trigger on an initial public offering of its shares on the EGX in late 1Q2021 or early 2Q2021, signalling our long IPO drought is coming to an end.

What’s Macro Group? Founded in 2005, Macro is now among Egypt’s largest and fastest-growing cosmeceutical players. The company recorded a 23.1% overall market share in 2020 with a portfolio of 124 high-margin SKUs, with 79 new SKUs in the pipeline to be rolled out between 1Q2021 and 2Q2023. Macro manufactures its products at its Badr City facility. The company uses a prescription-based, consumer-centric model that relies on physicians “as the main drivers of business,” in addition to distributing its products through some 60k pharmacies. Macro also exports its products to markets in the Middle East and Africa, and could later see wider regional expansion.

How big is the sale? The offering will see up to 49% of Macro on offer as shareholder Leo 1 sells 282.9 mn ordinary shares in a secondary sale, meaning existing shareholders will offer part or all of their stakes to the public, and no new shares will be offered. The sale will include offerings to both institutional investors in Egypt and abroad, as well as retail investors here at home.

Who’s selling? Expect to see indirect shareholders Enverson International Company, MEA Healthcare Partners, and Macro co-founder Ahmed El Nayeb among those selling down their positions in Macro through Leo 1, in which they each hold indirect stakes. Leo 1 is a special-purpose investment vehicle that holds 99.9% of Macro.

The financials: Macro has a revenue CAGR of 34% (for 431 mn in 2020) and an EBITDA CAGR of 92% between 2018-2020. The company’s bottom line also registered a 98% CAGR during that time.

Advisors: CI Capital and Renaissance Capital are joint global coordinators and joint bookrunners. White & Case is international and (with MHR & Partners) local counsel, while Dechert LLP and Zaki Hashem & Partners are counsels to the joint global coordinators and bookrunners. Inktank is investor relations advisor.

Macro’s IPO will be instrumental in sustaining the momentum on the EGX after a long, hard drought. Taaleem Management Services is also in the market and could close its transaction before the end of 1Q2021. No company has listed on the EGX since Emerald in early 2020, and Egypt has not seen an international-quality IPO since 2019, when Rameda and fintech darling Fawry went to market. Ebtikar is also set to IPO later this year, with its EGX debut expected in 2H2021.

Want more? Read the company’s ITF (pdf) here.

Correction: The original version of this story published on incorrectly identified the company as having net profit of EGP 431 mn in 2020. That figure refers to its revenues in the same year. We have also amended language to make clear that Macro’s shareholders are offering “up to 49%” of the company’s shares.

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