The past week has seen a power tussle between UK based private equity firm, Alta Semper Capital and the founder of one of Nigeria’s top pharmaceutical companies, HealthPlus. The tussle arose after the Board of HealthPlus announced changes in the Company.
Alta Semper Capital LLP particularly invests in leading markets and businesses across Africa and following their investment in Egypt’s medicated cosmetics company, Macro Pharma in 2017, they invested in Nigeria for the first time, through HealthPlus. In March 2018, Alta Semper Capital signed an agreement with HealthPlus Africa Holdings to invest $18 million into the healthcare business.
In the signed contract, the investment was to be made in two tranches, with $10 million paid in the first tranche and the remaining portion paid in the second tranche at the end of 12 months. Bukky George, a Nigeria and UK trained pharmacist with over 25 years pharmaceutical industry experience founded HealthPlus in 1999, which has become one of Nigeria and West Africa’s leading pharmaceutical companies.
To continue to grow the business, George said in 2018 that “Alta Semper is the right partner for our next stage of growth as they focus on the healthcare sector, and also invest patient and flexible capital which will allow us to grow strategically across Nigeria and further our mission to provide high quality and affordable healthcare products and services to a market that is large and growing.”
The $10 million invested gave Alta Semper Capital 53.8 percent shares in HealthPlus, thus giving them control of the majority shareholding.
Howver, and to the surprise of many, an array of social media mudslinging broke when a letter addressed to the Pharmacist Council of Nigeria (PCN) on the 25th of September 2020 by the Board of HealthPlus announced the termination of the appointment of George as the CEO of the Company.
The letter stated that Chidi Okoro, a teacher of Strategy at Lagos Business School and Founder/Executive Consultant of Drugs and Medicaments Nigeria Ltd, will join Health Plus as the Chief Transformation Officer to optimize day-to-day management and elevate the business and boost profitability.
The letter, signed by Afsane Jetha and Zachary Fond, Managing Partner & CEO, and Director of Alta Semper Capital, respectively, also stated that George was going to remain a Director and a shareholder and would be allowed to participate in decision making at the company level.
The statement was however ruled as false by George, who said Alta Semper’s statement was not authorised.
“We wish to inform the General Public, the Pharmacists Council of Nigeria, our Staff, loyal Customers, Vendors, Landlords, Bankers, and all Stakeholders that the press release was not authorized by the company or anybody acting on its behalf, and that the announcement of the appointment of a CTO is wholly false,” she said.
George also said that Alta Semper did not hold their end of the deal, as even after 18 months, they are yet to pay up the balance of the initial agreed investment. She also emphasised during a private press interview how this contract breach has affected the working capital of the company resulting in an inability to put drugs on their shelves.
In response to the HealthPlus founder, Alta Semper Capital released a statement saying “the move was made in full compliance with Nigerian laws, and follows a long and drawn-out process of engagement,” as the founder failed to meet up to expectations even as the company continues to face a pressing cash need.
“The board had explored a range of options that would enable her to continue to play an alternate leadership role but she rejected it and it became clear that an amicable resolution was not going to be possible because the persistence of the multiple issues required urgent action to avoid adverse impact on the entire business, including customers, employees, suppliers, and other key stakeholders,” Alta Semper Capital said.
Alta Semper also tried to help George with growth capital for the company despite her not being able to achieve the target set for her but “Mrs. George has not only refused to agree to offers of additional investment on commercially reasonable terms, but attempted to force ASC to restructure the existing binding contracts governing their relationship agreements, which she readily signed in 2018, after taking independent legal and financial advice.”
Business lawyers told Business Day that as a majority shareholder of Health Plus, Alta Semper has the right to make such decisions. The superiority of Alta Semper on the board of Health Plus typically puts the firm in pole position to influence major decisions for the business.
A Majority shareholder is a shareholder who owns and controls most of a corporation’s stock.
Only those persons who own more than 50 percent of a company’s shares can be a majority shareholder.
Generally, a majority shareholder has more power than all of the other shareholders combined. Majority shareholders also have the authority to do things that other shareholders do not have, such as replacing a corporation’s officers or board of directors.
Alta Semper has over 53 percent stake in Health Plus and that gives the PE firm the right to make decisions at the pharmaceutical company. This means the firm is acting within the law.
HealthPlus in May 2020 tried to avoid what they called “a hostile takeover” and took legal actions at the Federal High Court against Alta Semper Capital from continuing to run and manage the company, according to George.
Since the 2016 collapse in oil price that sent Africa’s largest economy into 5 quarters of negative growth, Foreign Direct Investment (FDI) has continued to decline. Data from the National Bureau of Statistics (NBS) shows that FDI fell by 59 percent to $934 million in 2019 from $2.29 billion.
These numbers are expected to fall further given the pandemic that has heightened economic uncertainties and spooked outflows. For a country that is thirsty for FDI to boost its dollar reserve and create jobs for its timing youthful population, the squabble could cast a cloud by scaring investors away from the Nigerian market.
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