- Hela Kenya has received US$14 million from Norfund to strengthen the development of its manufacturing operations in East Africa
- The proceeds from Norfund’s investment will be utilised to strengthen Hela’s strategic supply chain partnerships in East Africa
- It will also enable Hela to leverage regional sourcing from Kenya and Tanzania to a larger extent, providing significant cost and lead time advantages for manufacturing in the region
Kenyan-based apparel company Hela Apparel Holdings PLC has received US$14 million (KSh 1.7 billion) from Norfund to strengthen the development of its manufacturing operations in East Africa.
Norfund, the Norwegian government’s investment fund, announced on Monday, February 27, 2023, that it had invested the amount in Hela Kenya. The company employs over 4,000 people and is the largest manufacturing facility within the Sri Lankan company Hela Group.
The proceeds from Norfund’s investment will be utilized to strengthen Hela’s strategic supply chain partnerships in East Africa.
It will also enable Hela to leverage regional sourcing from Kenya and Tanzania to a larger extent, providing significant cost and lead time advantages for manufacturing in the region.
A potential supply chain investment is also being considered by Hela for the proceeds.
Proposed Capex investments within the Kenyan manufacturing facility on process automation will enhance productivity and place the facility in a more competitive position within the region.
Norfund invests in Hela Kenya
Located at the Export Processing Zone, Athi River complex, Hela Kenya is one of the largest of its kind in Kenya and currently produces approximately 20% of the country’s total apparel exports.
Hela was the first major Sri Lankan apparel manufacturer to establish operations in Kenya in 2016 and has played a leading role in the rapid growth of the industry across the continent over recent years, with the subsequent establishment of manufacturing locations in Ethiopia and Egypt.
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Commenting on the funding, A.R Rasiah, Chairman of Hela Apparel Holdings said their expansion to Africa has been a rewarding venture, and they continue to see many opportunities within the region for further development.
Rasiah noted that given the increasingly unpredictable global environment, establishing long-term financing relationships with strategic partners who share their vision for Africa as a global apparel-sourcing hub plays a critical role in ensuring the envisioned plans for growth are realized.
“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 said.
“The intended investment in our Kenyan manufacturing facility, which will be supported by this lending from Norfund, is a key part of the Group’s strategy to remain globally competitive. On behalf of the Board of Directors, I would like to take this opportunity to thank Norfund for their partnership and support towards the organisation’s vision,” he further added.
William Nyaoke, Norfund’s Regional Director for East Africa said that they have continued to see great opportunities in contributing to large-scale job creation in East Africa by investing in the apparel and textile industry, which is in line with their goal of building sustainable businesses to combat poverty.
“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. We look forward to a fruitful partnership in the years to come”, William said.
Norfund investments in Kenya
The funding comes days after Norfund signed a new partner to invest in Balaji Group, a Kenyan-based textile manufacturer.
As reported by The Exchange Africa, Norfund said it has partnered with Ethos Mezzanine Partners 3, a closed-ended specialist credit fund to invest US$25 million into Balaji, which is one of Sub-Saharan Africa’s leading textile companies.
The investment is also expected to aid the creation of 6,000 new direct jobs and another 6,000 indirect jobs.
The two partners said they have executed a USD 25 million mezzanine debt investment in the Balaji Group, with both contributing US$12.5 million each.
Balaji Group is based in an Export Processing Zone in Nairobi, Kenya where it operates the largest apparel manufacturing business in Sub-Saharan Africa, producing garments for many global brands and retailers which are exported predominantly to the USA.
