Norfund has signed a USD14 million (Sh1.8 billion) financing deal with Hela Apparel Holdings to reinforce the development of its manufacturing operations in East Africa.
NDBIB, Sri Lanka, was the financial advisor for the deal by the Norwegian government’s investment fund supporting sustainably driven business operations in developing countries.
Established in 2016, Hela Kenya is based at the Export Processing Zone (EPZ), Athi River complex, and is the largest manufacturing facility in the Hela Group with more than 4,000 employees.
Hela is also one of the largest in Kenya producing about 20 per cent of Kenya’s total apparel exports and was the first major Sri Lankan attire manufacturer to launch its operations in Kenya.
The manufacturer has played a key role in the industry's rapid growth across Africa in recent years, with the succeeding establishment of manufacturing locations in Ethiopia and Egypt.
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Hela Apparel Holdings Chairman A.R Rasiah said the firm’s expansion to Africa has been rewarding and they continue to pursue more opportunities in the region for further growth.
“Given the increasingly unpredictable global environment, establishing long-term financing relationships with strategic partners who share our vision for Africa as a global apparel sourcing hub is critical in ensuring the envisioned plans for growth are realized,” Rasiah said.
He added, “Hela’s African operations provide livelihoods to thousands of people, and our continued growth as a manufacturer will help us continue to strengthen and empower many communities across the globe.”
He indicated that Hela’s planned investment in its Kenyan manufacturing facility, backed by the Norfund lending, is a critical part of the Group’s strategy to remain competitive globally.
The firm says Norfund’s funding will also be used to strengthen its regional strategic supply chain partnerships to leverage regional sourcing from Kenya and Tanzania to provide key cost and lead time manufacturing advantages.
It says the proposed Capex investments in the Kenyan manufacturing plant on automation will boost productivity and enhance the facility’s competitive advantage in the region.
“We see great opportunities in contributing to large-scale job creation in East Africa by investing in the apparel and textile industry, in line with our goal of building sustainable businesses to combat poverty,” said Norfund's Regional Director for East Africa William Nyaoke.
He added, “We have been impressed with what Hela has already delivered through its investments in East Africa and are confident that this partnership will go a long way in helping Hela create more employment opportunities, primarily for low-skilled women and those vulnerable in society who struggle to find such opportunities.”
NDBIB CEO Darshan Perera indicated that Norfund was one of the largest shareholders of its ultimate parent, NDB Bank, and that the agreement is part of their successful relationship.
“The wealth of knowledge gained by our prior dealings with Norfund and other DFIs enabled us to successfully execute this transaction, which is Hela’s first fundraising via a DFI. We are extremely pleased to have advised Hela in our debut transaction in the African Region. We look forward to working with them to realise their plans in Africa,” said Perera.
