54 Capital, an Africa focused private equity firm, has invested $42m into Addis Pharmaceutical Factory (APF), Ethiopia’s leading pharmaceutical manufacturer.

An initial investment of $30m, with the option to invest a further $12m will be used to increase national and international reach through improved production capacity and product portfolio, and to obtain WHO certification.

With headquarters in Adigrat, Northern Ethiopia, APF manufactures a significant number of high quality products across different therapeutic categories that it supplies primarily to the Ethiopian market.

Saad Aouad, Founder and CIO of 54 Capital, said: “The Ethiopia pharmaceutical sector is one of the most exciting industries in the country and is poised to witness a high level of demand in the coming years."

"Through our investment into APF we will be both partnering with EFFORT, an investment group dedicated to transforming the Ethiopian business landscape, and investing into one of the leading companies in the country; marking our recognition of the importance of the sector in Ethiopia and our continued commitment to the country,” he said.

EFFORT is the Endowment Fund for the Rehabilitation of Tigray, which was established in 1987 E.C under the Ethiopian Commercial Code of 1960 as a charitable endowment fund from resources donated by its members.

Azeb Mesfin, CEO of EFFORT, said: “APF has already achieved considerable results under EFFORT’s leadership, and we believe that together with our new partner, 54 Capital, the company will be able to grow even stronger under the guidance of international experts who will work hand in hand with an already motivated management team."

"We are pleased to see further foreign investment into the country, which we believe will play a vital role in the development of the private sector over the coming years,” he added.

APF intends to use the investment proceeds to enhance all aspects of its business; working in collaboration with a team of international experts to boost its production capabilities, implement best pharmaceutical manufacturing practises, and set the standards for high quality pharmaceutical manufacturing in the region.

Shimelis Mamuye, General Manager of APF, said: “As the Ethiopian market leader within the pharmaceutical sector we are proud to be partnering with international experts to move to our next stage of growth and development in line with the country’s growth ambitions. We believe that we have a fundamental role to play in the development of the pharmaceutical sector in Ethiopia and we are committed to achieve the best results possible.”

Dentons (Casablanca office, Morocco), Mesfin Tafesse Law Office and Deloitte have advised 54 Capital on this transaction.

EFFORT and APF were advised by Ernst & Young.

54 Capital was established in May 2013 as an asset manager focusing on Africa.

In addition to this investment, the firm has invested approximately $35m into the FMCG sector in Ethiopia since 2014, through the acquisition of majority stakes in companies serving the beverage and food markets.