PE Fanisi eyes 200 Haltons Pharmacy stores with Sh2 billion injection

Private equity firm Fanisi Capital plans to invest Sh2 billion in the expansion of Haltons Pharmacy chain, a move intended to quadruple the drug retailer’s stores in the next two years.

Fanisi Capital said that its investment will result in Haltons Pharmacy growing its branch network to 200 stores by the end of 2017 from the current 50.

The financing will also go towards diversifying products.

“We are confident in Haltons Pharmacy’s business model and would like to confirm this confidence by making further investment into the company as it expands in terms of geographical reach and product and services offering,” said Fanisi Capital managing partner Ayisi Makatiani.

Fanisi first bought into Haltons in September 2013 when it acquired an undisclosed stake for Sh300 million ($3 million).

To grow its branch network Haltons has entered into an arrangement with Vivo Energy to have drug stores located at Shell service stations. This model of using infrastructure developed by another party is expected to save the chain set-up costs.

“It is difficult and expensive finding space for business premise. This partnership now makes it much easier for us to establish outlets in more than 150 Vivo Energy stations across the country. It also makes it easy, should we decide to venture the region, where Vivo Energy already has a presence,” said Haltons’ chief executive officer Sam Njuguna.

Haltons will also avoid other high costs such as goodwill by using this model.

READ: Fanisi Capital acquires $3m stake in Nairobi drugs chain

The drug retail chain has also entered into a similar arrangement with Tuskys Supermarket chain. For Vivo, the deal with Haltons will increase the offerings at its service stations.

“The partnership with Haltons continues to reaffirm what we have always said and believed in that convenience retail is an extension of our core business at Shell service stations,” said Vivo Energy chief executive Polycarp Igathe.

Vivo Energy entered into a similar partnership with Tuskys Supermarket chain in 2014 to have small convenience stores at its service stations.
The private equity firm has cited healthcare as one of the key areas that it will invest in through its $50 million (Sh5 billion) fund.

Organisers of the Kenya Pharma Expo say the multibillion-shilling industry has been growing in double- digit rates due to increased expenditure in healthcare by both the private and public sector.

By end of 2014, the Kenyan drug market was expected to hit a value of Sh33.5 billion, equating to a compound annual growth rate (CAGR) of 13.53 per cent in local currency terms.

Catalyst Principal Partners is another private equity firm that has invested in a pharmacy chain through its acquisition of Mimosa Pharmacy chain for an undisclosed amount.

Mimosa which targets the high-end market was rebranded as Goodlife and plans to have 80 pharmacy stores in the country by 2020. Fanisi has also invested in Sophar Limited, a Rwanda-based pharmaceutical wholesaler.