The Sunrise conducted this exclusive interview with Mr. Emmanuel Katongole, the Executive Chairman – CIPLA Quality Chemical Industries Limited, on the Initial Public Offer (IPO), which closes today, Friday, 24th August 2018. Below are the excerpts:
Question: Tell us in brief about Cipla Quality Chemical Industries Limited?
Answer: Cipla Quality Chemical Industries Limited – Cipla QCIL or call it, the Company – is a 13 year-old state-of-the-art pharmaceutical plant based in Kampala. It is focused on the production of high-quality, World Health Organization (WHO) pre-qualified, life-saving medicines for the sub-Saharan Africa (SSA) region. The Company’s products and pipeline target three major diseases that are widespread in Uganda and SSA; and comprise anti-malarials, anti-retrovirals and Hepatitis B drugs. Cipla QCIL’s facility has been approved by regulatory authorities in the following countries: Uganda, Kenya, Rwanda, Tanzania, Namibia, Ivory Coast, Zambia, Zimbabwe, Malawi, Mozambique, Ghana, Ethiopia, Angola and South Sudan.
Q: CiplaQCIL last week launched an Initial Public Offer. Tell us what that is all about?
A: The Board of Directors of CiplaQCIL announced for the first time the opening of an Initial Public Offer (IPO), through which it is floating its shares to be listed on the Uganda Securities Exchange. The IPO opened on Tuesday 14th August and will be closing, tomorrow, Friday.
Q: How many shares are available and how much are they being sold at?
A: There are 657, 179, 319 offer shares available, at an offer price of UGX 256.5 per offer share. Except for Cipla (EU) which is selling its entire stake, each of the other shareholders will be selling a minority of their stakes to enable a sufficient free float and liquidity. Cipla Group, through its subsidiary Meditab, will retain a majority stake.
Q: Does this mean that with only UGX 256.5 one can get themselves a stake in CiplaQCIL?
A: No. One must purchase a minimum of at least 1,000 offer shares, which totals to 256,500 Uganda shillings. The public may think that when someone is selling shares, there’s a problem with the business investors don’t know about. Why are the founders selling shares at this time?
First, the Ugandan founders shall collectively retain a stake in the Company after the offer. The largest shareholder, Cipla Group, through its subsidiary Meditab, shall retain a 51.05% stake following the offer. All shareholders agreed to sell down some shares to meet the requirements of the IPO.
Q: What are the top three prospects for the business growth in the next three years?
A: The Company expects the top three prospects to be; increasing the product portfolio, establishing a manufacturing facility in Zambia, pursuing off-take arrangements with other African governments and expanding our footprint to 19 other African countries by 2020.
Q: The tax holiday will expire next year, 2019. Will Cipla QCIL seek an extension?
A: No, the Company will not seek an extension. Cipla QCIL has received a great amount of support from the Government of Uganda over the years.
Q: Why should the public invest in this company?
A: We are debt-free, profitable, and an established company with a history of providing dividends to shareholders. We are ambitious and have a long-term strategy for success. Accompany us on our journey of providing African solutions to African problems.
Q: How can interested investors purchase Cipla QCIL offer shares?
A: Interested investors may contact the following authorized selling agents to purchase offer shares: Crested Capital, African Alliance Uganda Limited, Baroda Capital Markets (U) Limited, Dyer and Blair Uganda Limited, Equity Stock Brokers (U) Limited, and SBG Securities. Investors can also visit any branch of Standard Chartered Bank to participate in the CiplaQCIL IPO.
Q: Where can one find detailed information on the CiplaQCIL IPO?
A: Investors are encouraged to obtain a copy of the prospectus which provides further details about CiplaQCIL and the IPO and is available for free via www.ciplaqcil.co.ug /ipo
Q: What are the requirements for participating in the CiplaQCIL IPO?
A: An investor needs to open a securities central depository [SCD] account with Crested Capital or another authorized selling agent, complete an IPO application form and deposit the value for the number of shares applied for.
Q: What is an SCD Account?
A: It is an account held and operated by the Uganda Securities Exchange. The account holds shares bought by an investor and currently has no charges or minimum balance requirements for SCD account-holders.
Q: What is the age limit for applying for the CiplaQCIL IPO?
A: One must be 18 years and above to apply. However, for persons under 18 years, their parents or other legal guardians can buy in trust for them and once they turn 18 years of age, the shares become their property.
Q: Can a non-East African apply for the CiplaQCIL IPO shares?
A: Yes non-East Africans in certain countries can buy shares as long as the regulations in their respective countries allow them to. Please see the “Important Notice” section below.
Q: In the case of an over-subscription, will people receive a refund of their money?
A: Yes, persons who are not able to acquire CiplaQCIL offer shares due to over-subscription will receive a refund of their money within ten days after the public announcement of the allocations. The money will be credited to their bank account numbers indicated on their respective IPO application forms.