Julphar, one of the biggest pharmaceutical companies in the Middle East and Africa, is embarking on an ambitious turnaround strategy. Jeff Topping / The National
Julphar, one of the biggest pharmaceutical companies in the Middle East and Africa, is embarking on an ambitious turnaround strategy. Jeff Topping / The National
Julphar, one of the biggest pharmaceutical companies in the Middle East and Africa, is embarking on an ambitious turnaround strategy. Jeff Topping / The National
Julphar, one of the biggest pharmaceutical companies in the Middle East and Africa, is embarking on an ambitious turnaround strategy. Jeff Topping / The National

Julphar shareholders approve restructuring plan through rights issue


Sarmad Khan
  • English
  • Arabic

Shareholders of Gulf Pharmaceutical Industries, one of the biggest generic drug manufacturers in the Middle East and North Africa, approved the company's plan to restructure its capital through a rights issue.

The plan aims to “strengthen the company’s capital position and improve its debt profile”, the company said in a statement on Sunday. The capital restructuring involves first reducing the company's share capital by just over Dh503m by cancelling shares to extinguish accumulated losses, and then raising up to Dh500 million through the issuance of new shares with a nominal value of Dh1.

The board of the troubled drug maker in January recommended the plan to the shareholders. The capital restructuring is subject to the approval of the UAE’s market regulator, the Securities and Commodities Authority.

Last year the company had to recall several of its products from cough syrups to mouthwash and its operations were adversely affected by a temporary suspension of the export of its products to Saudi Arabia, Kuwait and Oman.

The Ras Al Khaimah-based firm has also replaced several of its top executives including its chief executive and appointed new board members as financial stress mounted on the firm.

Following "comprehensive changes" to the board and its management team, Julphar is now looking to re-enter Saudi Arabia and Kuwait, expand its product portfolio and increase investment in its quality control systems. The firm is also implementing a cost optimisation initiative with a view to "returning to profitability and rebuilding its leading market position", it said.

"The capital restructuring will mark a milestone in the transformation that is underway at Julphar, which has a clear objective to restore our position as a leading regional pharmaceutical company within three years," said Essam Farouk, who was appointed chief executive in April.

Mr Farouk replaced Jerome Carle, who stepped down as chief executive in September.

"The recent relaunch of over 80 of our products in Oman demonstrates our commitment to serving all markets in the region," Mr Farouk said. "In the months to come, we will hold course and continue to upgrade our quality control framework as part of a large-scale review of our operating procedures and cost structure."

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Horticulturists suggest the best time for watering is before 8am or after 6pm, when water won't be dried up by the sun.

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