Saudi, Abu Dhabi wealth funds team up on Egyptian drugmaker deal

Two of the biggest sovereign wealth funds in the Middle East are exploring a joint bid for an Egyptian pharmaceutical company, a deal that could mark the beginning of wider co-investment plans between the two state-controlled firms, people familiar with the matter said.

Saudi Arabia’s Public Investment Fund (PIF) and ADQ, formerly known as Abu Dhabi Development Holding Co., are weighing the purchase of Bausch Health’s Cairo-based drug unit, the people said, asking not to be identified because negotiations are private. In addition, the two funds have held talks to work closely on other transactions in areas such as food security, health care and industrials, the people said.

A representative for ADQ wasn’t available to comment. The PIF and Bausch declined to comment. A spokesperson for Amoun didn’t answer two calls, or respond to a text message seeking comment.

Fearing global supply disruptions, Gulf states have been buying overseas farmlands and investing in agricultural technology. Abu Dhabi, mostly through ADQ, intensified efforts during the coronavirus pandemic by acquiring a stake in agricultural trader Louis Dreyfus Co. and investing in Lulu Hypermarket Group’s expansion into Egypt. The PIF is said to be weighing an investment into the same supermarket chain operator.

ADQ has been holding talks to acquire Bausch’s Egyptian business, known as Amoun Pharmaceutical Co., which could be valued at around $700m, Bloomberg reported last month. Talks are ongoing and there’s no certainty the deliberations will lead to a transaction involving one or both of the funds, the people said.

Bausch, formerly known as Valeant Pharmaceuticals International, has been reshaping its operations since gaining infamy on Wall Street for raising drug prices. One activist investor, Glenview Capital, has been pushing Bausch to sell or spin off more businesses.

On the Block
Valeant sought a buyer for Amoun in 2016, a year after buying it for about $800m to expand in the Middle East and Africa, according to people with knowledge of the matter at the time. Those discussions ended without a deal.

ADQ owns major enterprises spanning key sectors of the Gulf emirate’s economy, including Abu Dhabi Securities Exchange and Abu Dhabi Airports. The fund, chaired by Sheikh Tahnoon Bin Zayed Al Nahyan, and another investor agreed last month to buy a $2.1bn indirect stake in Abu Dhabi National Oil Co.’s natural gas pipelines.

The PIF, which holds about $347bn in assets, is a key lever for Crown Prince Mohammed bin Salman’s efforts to revive growth and get his economic master plan, known as Vision 2030, back on track following the fallout from the Covid-19 outbreak and lower oil prices.

Handed $40bn earlier this year to buy global stocks, the PIF will plow the same amount into the domestic economy next year and again in 2022. The fund intends to play a leading role in refocusing the economy toward underdeveloped industries like tourism and diversifying away from crude.