From investment to IPO: Backing an Egyptian consumer healthcare company
Private equity firm Alta Semper last year sold the majority of its stake in Egypt’s Macro Group Pharmaceuticals through an initial public offering on the Egyptian Exchange. At the African Private Capital Association’s (AVCA) annual conference, held earlier this month in Cairo, Afsane Jetha, the CEO of Alta Semper, discussed the firm’s investment in Macro, highlighting the company’s import substitution strategy and the efforts to prepare it for a stock market listing.
In 2017, Alta Semper invested in Macro, a company that produces more than 100 medicalised cosmetic products such as acne treatments, anti-scar gels and hair loss solutions. The business straddles the line between the consumer goods and healthcare industries.
Established in 2002 by Dr. Ahmed El Nayeb and Dr. Mohamed Sobhi, whom Jetha characterises as “two brilliant entrepreneurs,” Macro lacked the structures and processes required of a public company when Alta Semper invested in it. The company did not have regular board meetings or budgeting processes and was missing a human resources department and a CFO.
Consequently, the Alta Semper team collaborated with the founders to institutionalise the business and prepare it for a stock market listing. They assisted the founders in implementing governance processes, risk control, and patient safeguarding measures. “If you look at Macro [now], I’m proud to say it resembles a multinational business you’d see in other parts of the world,” Jetha explained.
She noted that the majority of the company’s competing products were imports, often carrying price tags three to four times higher than those of Macro’s offerings. By adopting an import substitution strategy, Macro has tripled its market share during Alta Semper’s investment period.
A key advantage for Macro is that, while the majority of its products are sold due to doctor prescriptions, they are not subject to the same stringent regulations as conventional pharmaceuticals. This enabled the company to introduce new products at a fast pace, allowing it to tap into Egypt’s rapidly-growing middle class. “We could launch new products every two to three months, versus every two to three years,” Jetha said.
Macro’s shares commenced trading on the Egyptian Exchange in February 2022, with a valuation of EGP 2.8 billion (equivalent to US$178 million at the time). Following Alta Semper’s investment, the company experienced a notable increase in its gross profit margin, rising from 63% in 2018 to 80% in the first nine months of 2021. Similarly, its EBITDA margin witnessed growth, expanding from 21% in 2018 to 41% during the same period in 2021.