Markets & Finance

Fanisi Capital buys stake in Kigali drugs company

cash

A man counts bank notes. Fanisi Capital has Sh4.4 billion for investment across the East African region. Photo/File

A Kenyan-based venture capital fund, Fanisi Capital, has invested nearly Sh260 million in a Rwandan drugs wholesaler, Sophar Ltd.

The Kigali-based company imports branded drugs, mostly from Europe, for sale in Rwanda.

The money would be disbursed through a mix of both debt and equity.

“Unfortunately we are not allowed to tell how much it is worth but it is less than $3 million (Sh260 million) but more than $1 million (Sh87 million),” said Fanisi Capital managing partner Ayisi Makatiani in an interview, citing non-disclosure agreements with the firm.

Fanisi Capital counts the International Finance Corporation, Norfund (Norwegian Investment Fund for Developing Countries), Proparco, Finnfund, Soros Economic Development Fund, the Segal Family Foundation, Sarona Capital and Lundin for Africa Foundation among its investors.

The fund has $50 million (Sh4.4 billion) for investment across the East African region.

Sophar will use the money to build a warehouse in Kigali, set up distribution centres and increase the drug dealer’s product range to 9,000 drugs from 300.

“Sophar will be seeking to build a modern warehouse and recruit managers within the next year,” said Sophar executive chairman Leon Fundira in a statement.
Fanisi Capital’s investment strategy caps the maximum investment in a single firm to $3 million (Sh260 million).

The warehouse is being built to the World Health Organisation standards. Sophar said that Rwanda, Burundi and Uganda are on the expansion trajectory, making them attractive investment destinations.

“Longer term, we intend to transform Sophar into one of the leading pharmaceutical wholesaler in East and Central Africa,” added Mr Fundira.

The drugs company was established in 2008 and is owned by 58 pharmacists in a quasi co-operative structure.

Sophar marks the Fanisi’s first investment outside Kenya.

Previous investments include Paystream Limited, a company that sells point of sales terminals, where it invested $1 million in 2010 and the Hillcrest International Schools in 2011.

Fanisi invests in firms that have a history of profitability and annual turnover of between $1 million (Sh87 million) and $8 million (Sh695 million).

Targeted firms must be in based in Kenya, Uganda, Tanzania and Rwanda and there must be a clear exit strategy for Fanisi, which has an investment horizon of between three and five years.

The company invests in companies that engage in agribusiness, health, financial services, education and the retail business sectors.

Investment and private equity firms have been bullish on regional small and medium-sized enterprises, offering the small firms much needed financing alternatives, especially at a time when interest rates on commercial bank loans are high.