Private equity firm Catalyst buys stake in Mimosa Pharmacy

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Private equity firm Catalyst Principal Partners has bought a stake in Mimosa Pharmacy, a retail drugs store chain, in the first local investment by the investor.

Catalyst said it made the investment jointly with Africa Chemist and Beauty Care (ACBC), a Mauritius-based pharmaceutical chain. The deal amount was not disclosed but a typical investment ranges between $5 million (Sh444 million) and $20 million (Sh1.78 billion). The private equity firm, however, said the stake is a mix of equity and debt.

Catalyst said its latest investment is meant to get it into the booming healthcare market, which has been rapidly expanding for more than a decade. Mimosa becomes the second pharmacy chain to get a private equity investment over the past 12 months.

Last September, Fanisi Capital bought a stake in local pharmacy retail chain Haltons for an undisclosed amount. ACBC estimates the pharmacy industry in Kenya is worth about $440 million (Sh39.4 billion) with an average annual growth rate of 22 per cent. The private sector accounts for half of the growth.

“The private healthcare sector in Kenya has evolved over the last 14 years owing to increased public awareness on the need for investment in personal health. This has led to increased consumer spending in medical care, beauty and cosmetic products,” said Catalyst managing director Biniam Yohannes in a statement.

“Kenyans are now targeting a holistic approach to healthcare aimed at improving one’s overall wellbeing.”

Chris Gitonga, founder of Mimosa, said the company would use the funds for expansion and to upgrade their stores. “I am optimistic that the acquisition creates a platform for Mimosa to realise its vision while empowering current staff through skills transfer and capacity building,” said Mr Gitonga.

Mimosa has six stores and targets the high-end market. The pharmacy chain will leverage on ACBC management’s experience in running stores in the US, Europe and working with large pharma such as Merck and Pfizer.

Fanisi Capital CEO Ayisi Makatiani said pharmacies are attracting investors such as private equity firms due to the latter’s ability to build them into structured brands which is not so common in the Kenyan market. “The industry is ready for consolidation,” Mr Makatiani told the Business Daily.

The bet is that consolidation can result in increasing market share which will in turn boost revenues.

Mimosa becomes the second investment by Catalyst Principal Partners this year following its February investment in EFFCO, a Tanzania-based logistics firm. Source: Business Daily Africa

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