HealthPlus: How Equity Firm’s Inability To Raise Funds Led To Crisis

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The blazing feud between top pharmaceutical retail company, HealthPlus, and Alta Semper Capital, a United Kingdom private equity firm, has its roots in a sudden deviation from the transaction agreement, sources have told Vanguard.

 Both parties had hit it off well in 2018, with Alta Semper agreeing to invest, in two tranches, $18million in HealthPlus, which was seeking to expand its footprint across Nigeria, develop a wholesale channel, invest in private label and as well as e-commerce. The agreement, announced by Bloomberg on 15 March 2018, was to last for at least five years with Alta Semper acquiring a stake in the pharmaceutical retail concern and the founder retaining the role of CEO for at least five years. At the time the agreement was reached, HealthPlus, founded by Mrs. Bukky George in 1999, had 76 retail outlets across the country.

Sources said the first tranche, amounting to about $10 million was paid the same month the deal was announced, with the second tranche due 12 months later. That however, was as good as it got.

Investment insiders familiar with the deal disclosed that many promises made by Alta Semper Capital to provide the second tranche of up to $8 million went unfulfilled. According to them, Alta Semper responded in the last quarter of 2019, six months after the second instalment was due, but not in accordance with the terms of the agreement. Alta Semper, they disclosed, offered to provide $2 million, saying that this was the sum approved by its investment committee.

“The equity investor proposed the $2 million as a convertible loan, since HealthPlus was now in dire need of capital. But the loan had onerous conditionalities attached to it. A major one was that it would be interest-free for two months after which interest at the rate of 20% per annum would kick in. It was also to be collateralized by 100% of the shares of George,” said a source.

George turned down the loan offer and asked for straight equity. She was said to have viewed the loan terms by Alta Semper as a takeover bid.

It was learnt that $2 million was offered as equity but the terms were still onerous. A deadlock ensued despite keen negotiations. The consequences of the delayed funding were dire. Working capital became inadequate, inventory was suboptimal, the shelves at the retail outlets became sparse, sales dipped, resulting in erosion of market share and value. Obligations to stakeholders became difficult to meet. As HealthPlus gasped for survival, George, said a source, was forced to inject her life’s savings into the business to keep it going. This is in addition to her family home and personal guarantees which were already collateral for the business co-owned with Alta Semper. Sources claimed she said “they have me bound hands and feet.”

In May this year, after 14 months of delayed funding, Alta Semper returned with an attempt to remove George as CEO and ‘promote’ her to the role of Chairman, a move she responded by filing before the Federal High Court a petition (Suit No. FHC/L/CS/609/2020) to seek minority shareholder protection. On 27 May, the court granted a motion on notice for interlocutory injunction to restrain Alta Semper from removing her as CEO.

Sources said the equity firm requested for informal mediation, which delighted George. The discussions were however frustrated by Alta Semper after three meetings over a three month period as the equity firm cancelled several meetings. Sources said it turned out that the delay was to buy time to build a case and file an arbitration claim in England, where Alta Semper was hoping to nail George.

Those knowledgeable about the transaction attributed Alta Semper’s inability to fund HealthPlus to the terms of the agreement the equity firm signed with its own fund providers, identified as the family offices of Ronald Lauder, Chairman of an Estee Lauder subsidiary; and Dick Parsons, former Chairman of Citigroup and Chairman/CEO of Time Warner/CNN.

“The plan was for Alta Semper to raise funds from Development Finance Institutions (DFIs) to swap with the capital from these family offices. Raising these cheaper institutional funds has been difficult to date, causing strangulation of their portfolio companies and delayed salaries of Alta Semper employees,” explained a highly placed investment banker.

By September, the quiet steps taken by Alta Semper to wrest the company and for which George went to court in May had become a bold and unrestrained attempt to take over the company. On 25 September, in a letter to the Pharmacists Council of Nigeria (PCN), Alta Semper announced that it had sacked George as CEO and appointed one Chidi Okoro as Chief Transformation Officer. The leadership change, said Alta Semper, “was made in full compliance with the Nigerian laws and follows a long, drawn-out process of engagement”.

George dug in, insisting that she remains in charge and pointing out that a major condition for leadership change, a resolution of the board of directors, had not been presented by Alta Semper because the company does not currently have a properly constituted board, plus the board had not met for over eight months. She also added that out of the five-man board of the company, only three were still members. The Chairman, a nominee of Alta Semper, Dr Ayo Salami, resigned on 24 September; while Deji Akinyanju, George’s nominee Director, had also resigned weeks earlier. George also challenged the prevailing view that Alta Semper owns 95 per cent of HealthPlus, releasing the list of shareholders showing her as having directly and otherwise about 48.9% stake.

“At the time of the equity investment in 2018, Mrs. Bukky George transferred 95% ownership of HealthPlus to a new entity called HealthPlus Africa Holdings Limited (incorporated in Mauritius), while retaining 5% shares in her own name. HealthPlus Africa Holdings Limited is owned by Mrs Bukky George (46.2%) and Idi Holdings (53.8%). Idi Holdings is Alta Semper’s investment vehicle. In essence, Mrs. Bukky George owns (directly and indirectly) 48.9% of HealthPlus,” said a statement released by the legal counsel of HealthPlus Limited.

The legal counsel of HealthPlus also stated that two Alta Semper directors, Afsane Jetha and Zachary Fond, used forged letterheads of the company to communicate with HealthPlus’ bankers, vendors and landlords in a bid to give an impression that it controls the company. An example is Upperlink, a payment platform whose officials were harassed with threats of paying damages if they continued to honour George’s log in details.

Associates of George informed that she denies that allegations of unmet performance targets is the reason for the failure to disburse the second tranche that it appears that Alta Semper had a takeover motive from inception.

The feud has attracted condemnation by many Nigerians, notable among them is the Business Founders Coalition, which stated that some foreign equity firms have been exploiting Nigerian entrepreneurs’ desire for growth capital to take over their businesses.


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