A local firm, Investas Capital Partners, has dangled a US$35 million cash offer for a controlling stake in CAPS Pharmaceutical, according to documents seen by Business Weekly. Investas, with “strategic representation” in the US, Britain and Dubai, intends to buy the entire stake in CAPS for US$35 million. The company, whose shareholders are based in the US, has put an alternative offer of US$18 million for 51 percent.
Business Weekly has, however, been told complications around CAPS’ legacy issues could scuttle negotiations between Investas and shareholders of the pharmaceutical firm.
CAPS, which used to supply the bulk of the country’s drug needs, is among the firms whose debts are lined up for restructuring by the Zimbabwe Asset Management Co. CAPS, previously listed on the Zimbabwe Stock Exchange, is 52 percent owned by Fred Mutanda, while the Government owns 40 percent. The remainder is owned by the public.
Sources said Investas, a locally registered firm, has secured a US$750 million facility to invest in southern Africa in various sectors including pharmaceuticals and telecommunications. The company is understood to be also targeting a local telecoms firm.
It is also understood that Investas representative based in Washington, US, recently met senior Government officials, including Health and Child Welfare Minister Dr Obadiah Moyo “to basically exchange notes” on the Investas proposal.
“The investor, represented by Oliver Chivore, met Dr Moyo, Andrew Bvumbe (Head of Zimbabwe Aid and Debt Management) and Dr (John) Mangudya (RBZ governor) in Washington recently to exchange notes so that they can have a better appreciation about the offer,” said one source who requested not to be identified.
Dr Moyo confirmed the meeting but declined to shed more light saying it “is irregular.”
“I can’t discuss that issue . . . talk to them not (information coming) from our side,” said Dr Moyo.
Mr Mutanda referred questions the Government.
According to the document, Investas intends to complete the majority shares in CAPS Pharmaceuticals and looking to have management contract to run the company.
“Investas considers this offer as a preliminary, friendly and exploratory approach towards acquiring a majority stake in CAPS and the terms of the acquisition will be more particularly set forth in a share acquisition agreement to be mutually agreed upon by the parties,” reads part of the letter of intent to Mutanda and also copied to Dr Moyo and Dr Washington Mbizvo, chairperson of the One-Stop Investment Services Centre Permanent Secretary Office of the President and Cabinet. Investas intends to immediately inject US$50 million to prop up production of drugs at CAPS’ Harare factory. An additional investment of over $300 would be made to build a new state-of-the-art drug manufacturing facility, the company added.
Conditions precedent to the proposed transaction include satisfactory completion of due diligence process by Investas, a satisfactory determination that the business operations comply with all country’s laws and regulations, approvals and consent by respective boards of Investas and CAPS as well as regulatory approvals. In addition, there must be no pending or potential material claims or litigation involving CAPS shareholders and material adverse change in the business prospects. Investas intends to enter into a management contract with CAPS for a consideration of three percent of the audited annual gross turnover of the company.
Who is Investas?
Investas was established with the following strategic goals in mind:
- To catalyse and drive foreign direct investment into Zimbabwe with prioritisation on projects of importance in the economic revival, domestic production and import substitution as well as exporting and job creation.
- To strategically invest in telecommunications, pharmaceuticals, agriculture and food processing, infrastructure, fuel distribution, fertilisers, logistics, and banking to help achieve affordability, price stability and availability of goods and services critical for the efficient well-being of Zimbabwe’s economy and sustainable long-term growth in shareholder value.
- To provide expansion or growth capital to both public and private, small-to-mid size enterprises that can embrace technology and scale business operations to become regionally dominant competitors.
- To realise long term upside in developing and consolidating markets through increased scale and strong platform for growth across diverse geographies and markets.