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Optimising opportunities in capacity utilisation, equity investment


Access to capital, especially cheap funds, has always been a concern for many businesses in Nigeria, particularly those in trade and manufacturing industries. The business environment, foreign exchange concerns, the gestation period of many businesses, owners’ strongholds on control, and competition from imported goods make it difficult for many to attract the right kind of funding. The recent debacle between Nigeria’s HealthPlus and a foreign private equity firm, Alter Semper Capital, raises concerns about the need for capital and hidden side of fundraising. FEMI ADEKOYA writes.

When STORM Technologies was raising their Series A funding, the founders talked to six different potential investors from different countries. While that answered any worries that the Philippine-based HR technology firm might have about generating investor interest, it also gave rise to a new problem.

“Each investor asks for different things. We just had to prepare whatever report they needed to see,” says Paolo de la Fuente, co-founder of STORM Technologies.

A good problem, but a problem nonetheless; and as data and report requests from investors piled up, STORM found itself sitting on a lot of documentation made according to investor’s interest, meaning the start-up was reactive, not proactive.


While there are standard reports investors require to get deeper understanding of the business, they also often ask for unique reports. Sometimes, these reports are dictated by the standards and requirements of the country or by specific criteria of the investors themselves. There are also instances when they are simply testing the founder’s ability to produce the information, along with a myriad of other reasons for investors’ requests.

For Nigerian businesses that have gone through the same route, a major demand has always been on how the equity shareholding structure would be defined.

Operating environment
While investment inflows can be helpful for growth and expansion, the dynamics of the domestic market also weigh on the ability to fulfil investor’s obligations; hence a takeover might be initiated.

Investors are usually wary of the Nigerian business environment reportedly depicted as a high risk for investments. A report released by Fitch Solutions in 2019, said Ghana, South Africa, and other smaller countries in Africa were better favourable destinations for foreign direct investment (FDI) than Nigeria.

The report titled, “43 NEW Africa Country Risk Reports,” explained that the countries had more stable environments for investment than Nigeria with heightened insecurity, an uncertain regulatory environment, and uncompetitive import conditions, among others.


Apart from uncertainty in the business environment, the organised private sector had continually raised concerns about the country’s high cost of doing business. There is also a risk created by the cost of getting justice and dispute resolutions.

Indeed, the healthcare and retail markets in Nigeria are characterised by growing demand, driven by favourable demographics, increased consumer awareness and evolving consumption patterns.

Furthermore, Nigeria is home to one of the least penetrated formal retail markets in the world, despite its large and growing population. The retail pharmacy sector is highly fragmented, with many independent drug stores and several patent medicine outlets. However, given structural challenges with the industry supply chain, counterfeit pharmaceuticals find their way into over 40 per cent of the retail market, while most wholesale and retail sales across the country are still made through the informal markets.

Moreover, much of the healthcare infrastructure is confined to major cities, with people living in urban areas having approximately four times as much access to healthcare as those living in rural areas.

Terms and condition
For Alter Semper Capital, the investment in HealthPlus was to enable the pharmaceutical company to capture the pent-up demand for high-quality yet affordable healthcare and professional beauty supplies by developing regional distribution centres in commercial hubs across Nigeria, and rapidly expand its footprint across Nigeria, while developing a wholesale channel and investing in private label and e-commerce.


In 2018, HealthPlus decided to collaborate with Alta Semper Capital, a foreign private equity firm (PEF), to inject fresh capital to further grow the business. Alta Semper was to exit after five years according to the agreement reached with that company and its associates, and Mrs Bukky George, the Founder and Chief Executive Officer was prepared to give the firm a controlling stake for them to realise their investment.

Recall that Alta Semper invested $10 million (approx.) to acquire 53.8% equity in HealthPlus, whilst Bukky George retained 46.2%.Alta Semper is believed to have agreed to invest an additional $7.1 million in HealthPlus, which would have further increased its stake, subject to satisfying certain conditions precedent to that. It would appear that these conditions were not met, and so Alta Semper did not bring in the additional funds into the business, and as such, the ownership remained as is.
Agreement gone awry

According to a recent statement from HealthPlus, the relationship between the parties ruptured “primarily on account of Alta Semper’s futile attempts to take over the company, leading it to deliberately starving the company of pledged funds as well as the intransigence of Alta Semper’s owners when reminded of their obligations.”

The statement reads: “In May 2020, Mrs Bukky George instituted legal action at the Federal High Court (Suit No. FHC/L/CS/609/2020), seeking by way of a petition to stop HealthPlus Africa Holdings Limited (the investment vehicle used by Alta Semper Capital, and which they control), and their nominee directors from continuing to run and manage the company in an oppressive and prejudicial manner and disregard of her interests as a member of the company.”


On its part, Alter Semper Capital said its decision to remove the Chief Executive Officer of HealthPlus was made in full compliance with the Nigerian law, and following a long and drawn-out process of engagement, through which the Board sought to address multiple issues with the way the Company was being managed.

“Despite a pressing need for cash in the Company over the past year, 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.

“The original vision of the company can still be achieved under new leadership and an enhanced management structure, for the benefit of all stakeholders. In decisions like this, the interests of the business and its employees must be put first, and that is what the Board has done. Mrs George continues to serve on the Board, while Mr Okoro oversees the day-to-day operations of the Company,” the firm said in a statement.

The validity of the termination of the Management Agreement must, however, be determined based on the process specified in the agreement for the CEO removal as well as the process specified in the Shareholders’ Agreement for decisions to be taken by the company directors/shareholders.


Ease of doing business
Nigeria needs more investors to navigate the bumps of doing business in the country. In July 2020, Vice President Prof Yemi Osinbajo, said the business reforms embarked on by the Presidential Enabling Business Environment Council (PEBEC), were opportunities to significantly boost local and foreign investments in the country. Based on the activities of PEBEC, the World Bank ranked Nigeria higher in its annual Ease of Doing Business Rankings.

Last month, Nigeria’s Minister of Industry, Trade and Investment, Niyi Adebayo, said he was actively working to attract more foreign direct investments into key industries to meet the demands of the African Continental Free Trade Area (AfCFTA).

Earlier in 2019, Adebayo said business linkages between large enterprises such as Transnational Corporations (TNCs), and local suppliers can be channelled for transfer of technology, knowledge and skills to host economies.


According to him, the process can enhance the competitiveness of developing countries, and help them to capture the opportunities for increased trade and investment brought about by globalisation and economic liberalisation depending on the commitment of all partners.

What is then required are actions that would complement these partnerships and not jeopardise the chances of Nigeria to grow its gross domestic product (GDP). The right signals must be sent to potential investors because with foreign investments inflow dwindling by the year, there are concerns that many small businesses may continue to find difficulty in attracting needed foreign capital.

Regulations that saw the end of bike hailing services are believed to further compound the scenario, even as business owners are equally expected to do their due diligence to avoid acquisitions that do not benefit the cause for which businesses were set up. All partners must play by the rules.


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