International Finance Corporation (IFC), the private business arm of the World Bank, expects to reach a deal for an equity stake with Square Pharmaceuticals — which broke ground for a new plant in Athi River on Monday — in future.
The Bangladeshi drug maker has disclosed that it rejected an initial proposal by the IFC for some shareholding in the Kenyan plant and instead partnered with Standard Chartered Bank to fund the project through a loan deal.
“Of course they (IFC) wanted to have equity, but really we don’t need that,” Square Pharmaceuticals managing director Tapan Chowdhury said in an interview, without disclosing the size of stake IFC was looking at.
“IFC has some contribution through Standard Chartered Bank , and so together they have some 60 per cent (of the funds into the project). We have brought in money from Bangladesh also through our bank.”
The pharmaceutical firm started construction of the plant on Monday at the tax-friendly export processing zones (EPZ) in Athi River with an initial investment of Sh2.58 billion ($25 million).
The total cost of building the plant, set for completion in July 2019, is estimated at Sh7.74 billion ($75 million) with an annual capacity of two billion tablets and 60 million bottles of liquid medicines.
The leading drug maker in Bangladesh will, however, utilise about a third of the plant’s capacity in initial years of operation, Mr Chowdhury said.
Expansion will be shaped by demand in the country and exports to the 400 million Common Market for Eastern and Southern Africa (Comesa) population.
“Well, we work in stages. Eventually when more money is required we will invest in it. This is just a start,” head of World Bank Group’s Health in Africa Initiative and the group’s lead health sector specialist Khama Rogo said in an interview.
“We know that for this to expand beyond where it is, they are going to require more money.”