Eastgate Capital Group has made its first healthcare industry investment, having paid $40 million (€30 million) for an “influential minority stake” in Egyptian firm Sigma Pharmaceutical Industries.
The money will enable the generic pharmaceutical firm to expand into other key regional markets, including Saudi Arabia, Algeria and Sudan.
Sigma was established in 1998 and, according to a statement put out by Eastgate, is currently ranked 10th in the Egyptian pharmaceutical market in terms of sales. In 2008, Sigma had revenues of more than EGP340 million ($60 million; €46 million), representing 44 percent growth over the previous year.
The deal is the second from Eastgate’s shariah-compliant MENA Direct Equity fund, which held a first close on $250 million and is targeting a final close of $400 million to $500 million for investment in Saudi Arabia, Turkey, Egypt, Algeria and the UAE. Sigma is the fund’s first foray into the healthcare sector, which has been earmarked as a key area of focus for the fund.
“Based on our internal analysis and research, we have developed strong interest in the regional healthcare sector and the generic pharmaceutical industry in particular, which not only offers attractive upside but also resilience to economic downturns,” said Ghazi Al-Rawi, a founder and managing partner of Eastgate Capital Group.
First Capital Financial Advisory and Arab Legal Consultants advised Sigman, while Eastgate was advised by King & Spalding and Shalakany Law Office.
Eastgate currently has more than $650 million in commitments under management across its three funds: the MENA Direct Equity Fund; Eastgate Global Emerging Markets Direct Equity; and Eastgate IndustRE Development Fund. It is the private equity arm of Saudi Arabian bank NCB Capital.