Provision of an equity investment of up to USD 75m for the acquisition of Egyptian generic-drug maker Adwia Pharmaceuticals. EBRD partners with a group of co-investors: CDC, a development finance institution funded by the UK government, and ADP III, a private equity fund advised by Development Partners International (DPI), a pan-African private equity firm, to create a new Company with the aim of acquiring generic manufactures with particular focus on North Africa including Egypt.
EBRD investment will support the Company's objective to become a strong player in the specialty pharma generics in Egypt as part of the Company's ambitions to be a major Pharma player with a particular focus on North Africa. In addition to the acquisition of Adwia, the Company, with funding support of the Co-Investors will acquire Celon, an Indian oncology and critical-care product specialist. Adwia will benefit from Celon's strong know-how in drug development, including for chronic and life threatening health conditions.
ETI score: 68
Primary quality i Competitive: The project supports the introduction of new products that are currently rare in the Egyptian market; lowering costs of the new products and stimulating competition, and enables operational improvements of the acquired targets by capturing revenues and cost synergies derived from the efficiency measures and particularly cross-selling of products between the Company's acquired targets
Secondary quality i Well-governed: The project will support the development and implementation of significant Business Integrity, Corporate Governance, and Environmental, Health & Safety and Social improvements for the acquired targets.
ZANZIBAR PHARMA LTD
A newly established UK holding Company ("Holdco") owned by EBRD, CDC and ADP III (a private equity fund advised by DPI). The Company intends to be an integrated generic pharma player through pursuing a bolt-on acquisition strategy with a specific focus on the North Africa region
EBRD Finance Summary
Total Project Cost
The Bank's participation will bridge the funding gap to achieve the first closing alongside its partners. EBRD's sizable investment provides the market with a positive signal which will help the Company to raise additional growth capital in the future.
Environmental and Social Summary
Categorised B (ESP 2014). Environmental and Social (E&S) issues associated with pharmaceuticals formulation and distribution operations are site specific and can be mitigated through introduction of specific improvements and management practices. The Environmental and Social Due Diligence (ESDD) was carried out by an independent consultant under the TOR prepared jointly to satisfy requirements of the participating investors (CDC, DPI and EBRD). ESDD included a review of the targets' corporate E&S policies and management systems and visits to the facilities in Egypt and India to identify site-specific issues and risks.
ESDD showed overall compliance with national environmental and social legislation by both targets that are also certified for compliance with ISO9001 Quality, ISO14001 Environmental and ISO45001 Occupational Health and Safety Management Systems standards. However, their institutional capacity and management systems need to be strengthened in order to fully implement the Bank's Performance Requirements (PRs). The Environmental and Social Action Plan (ESAP) was developed based on ESDD findings to address identified issues and ensure compliance with the Bank's PRs and other Investors' safeguards policies. As part of the ESAP, an ESG Committee will be set up at the platform company level and each target's EHS managers will be appointed after the acquisition to ensure adequate resources and supervision in ESAP implementation. Along with specific E&S warranties & indemnities in the acquisition agreement, the shareholders agreement includes requirements for the Platform Co. relating to compliance with E&S laws, management systems, organisational structure, exclusion activities and reporting requirements as well as implementation of an ESAP with provisions at the platform level and specific to each target.
Both plants comply with respective national Good Manufacturing Practice (GMP) standards ensuring product safety and appropriate pharmacovigilance practices. The operations of pharmaceuticals formulation without API manufacturing at both targets are not associated with any major environmental issues due to the nature of the processes involving mainly mixing, drying and molding of tablets and preparation of liquid solutions, including sterile forms. The independent ESDD did not raise any concerns on potential past or present soil contamination and historic liabilities. The plants are equipped with HVAC systems to abate dust emissions and to provide required air circulation for clean rooms, and no significant VOCs emissions from the use of solvents, or road transport and boilers combustion emissions were reported. The waste and material storage and handling practices can be improved, as well as occupational health and safety management. There are no residential areas in proximity to the targets as both are located in industrial zones. In terms of other social issues, there will be a need to update Human Resources policies at both sites covering issues such as employment of casual workers, development of a worker's committee, potential retrenchment, formalisation of internal and external grievance mechanisms and implementation of Stakeholder Engagement Plans.
These and other E&S issues are addressed via ESAP, and other legal documents provisions, and therefore, adequate resources and capex would need to be allocated by the Company. The Bank will review the Client's E&S performance via annual E&S reports and monitoring visit if necessary.
Technical Cooperation and Grant Financing
Company Contact Information
1 Bartholomew Lane, London EC2N 2AX, United Kingdom
PSD last updated
17 Dec 2020
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