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Wednesday, 2 February 2022

Local pharma player Nerhadou attracts private equity interest

Nerhadou may have new minority shareholders: Emerging-market private equity firms Affirma Capital and StonePine have agreed to invest USD 20 mn to purchase a “significant minority stake” in local pharma and nutraceutical player Nerhadou International, according to a press release (pdf), which didn’t disclose the size of the stake or the value of the transaction.

Why Nerhadou? The two PE firms “identified Nerhadou as a unique player due to its sizeable presence and dominant market share,” the statement reads, describing it as “one of the largest and fastest-growing nutraceutical and pharma players” in the country. They also noted that the pharma firm is the first to manufacture oral dispersible film — tabs that dissolve on the tongue to deliver meds, as an alternative to pills — in Egypt, giving it a first-mover advantage.

IPO dreams: Nerhadou plans to use the investment to expand operations and launch new products in Egypt and regional markets, as well as to “bring the company to IPO standards,” CEO Mohamed Shalaby said.

This isn’t StonePine’s first gig in Egypt: StonePine ACE Fund — a joint venture between StonePine Capital Partners and ACE & Company, a Geneva-based global PE fund — was among the consortium of companies that acquired a 60% stake in Taaleem Management Services in 2019. It has also made an undisclosed investment in funeral services startup Sokna.

Affirma has been eying the Egyptian market for a while now: Affirma does not list any Egyptian investments on its website, though last year it was reportedly planning to invest USD 20-100 mn in at least one Egyptian business.

More on the way? The investment “will support the broader Egypt-focused investment strategy for both firms which are in the process of evaluating and jointly-executing further investment opportunities in Egypt,” the statement said.

When will the transaction close? Execution is subject to satisfaction of conditions precedent and requires regulatory approvals, including from the Egyptian Drug Authority.

Advisors: Renaissance Capital was the exclusive financial advisor to Affirma Capital and StonePine, while ADIB Capital acted as the lead sell side advisor. Al Tamimi & Co was Nerhadou’s legal advisor and White & Case advised Affirma Capital and StonePine.

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