PE firm Catalyst given green light to close Orbit shares deal

April 26, 2016

Nairobi-based private equity firm Catalyst Principal Partners has received the go-ahead to complete its investment in manufacturing firm Orbit Chemical Industries Ltd.

Catalyst Monday announced the Competition Authority of Kenya had approved the investment — whose amount it did not disclose — which will be used by Orbit to increase manufacturing capacity, regional operations and product range.

The 500-employee firm operates from its Mlolongo factory in Athi River.

Besides own products, the firm is a well-known large-scale contract manufacturer. It counts among its customers firms like Unilever Kenya, Bidco Oil Industries, Kapa Oil Industries Ltd, Reckitt Benkiser, Farmer’s Choice, Kenya Airways, Coca Cola, New KCC and Delmonte.

Although both parties have not disclosed the size of the deal, Catalyst’s typical investment ranges between $5 million (Sh500 million) and $20 million (Sh2 billion), either through equity, debt or a mixture of both.

“We will be able to leverage the relationship (with Catalyst) to accelerate our growth plans, particularly in entering new markets in which Catalyst has a depth of experience as active investors across the region,” said Orbit chief executive officer Sachen Chandaria.

Orbit is a 43-year-old company that primarily supplies industrial chemicals to industrial, pharmaceutical, food and domestic products manufacturers. It makes soaps, petroleum jelly, hand gels, detergents, fertilisers, liquid detergent, washing powders and fertiliser, pesticides and herbicides.

In April last year, NSE-listed Eveready East Africa announced that it would form a joint venture company of equal stakes with Orbit Chemicals with the aim of producing common goods, mainly in the personal care range.

The joint venture is aimed at leveraging on Eveready’s distribution network and Orbit’s manufacturing expertise.

The investment in Orbit is the third for Catalyst in Kenya having invested in the pharmacy retail chain Goodlife — formerly known as Mimosa Pharmacy — and in SME lender Jamii Bora Bank.

Catalyst invests in companies for between four and six years before exiting.

Across the region, the PE firm has made investments in Tanzania in personal healthcare manufacturer ChemiCotex Industries, logistics and heavy equipment renting company EFFCO and Chai Bora, a tea packer which also has operations in Kenya.

In Ethiopia, Catalyst has invested in mineral water bottling company, Yes Brands.

In Jamii Bora, Catalyst had by the end of last year raised its stake progressively to 11 per cent from the initial 4.4 per cent investment made in 2014, buying the additional shares through the over-the-counter market and consequently getting a seat on board.

The PE firm will, however, be diluted back to eight per cent in Jamii Bora following the entry of new investors Equator Capital Partners and Progression Capital Africa Ltd.

The two firms will each get an eight per cent stake in the bank when their Sh1.2 billion convertible debt investment is converted into equity in September. Source: Business Daily Africa