Norfund and Ethos back Kenyan textile manufacturer

Norfund and Ethos Mezzanine Partners 3 have executed a $25 million mezzanine debt investment ($12.5 million each) in textile manufacturer Balaji Group.

The company 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.

The textile and apparel sector is relatively underdeveloped in Kenya compared to many Asian economies where it has played a key role in underpinning economic growth and creating new jobs on a large scale. In Kenya there are already more than 50,000 workers that are employed in the sector, and there remains considerable potential for further growth.

Balaji Group already employs over 12,000 people, and with the capital support of Norfund and Ethos Mezzanine Partners it aims to hire 6,000 new direct workers and create opportunities for another 6,000 indirect jobs across the value chain.

“Ethos Mezzanine Partners provides growth and replacement capital to mid-market businesses across East Africa, the Horn, and Southern Africa. We are excited to partner with the Balaji Group and Norfund to fund the next phase in its growth trajectory that spans 21 years since it was founded by Pankaj and Amit Bedi,” says Phillip Myburgh, managing partner of Ethos Mezzanine Partners.

The investors bring much needed capital to fund the company’s further growth. By financing the replacement of Balaji’s old washing facility with new modern washing machines, its manufacturing capacity will increase by 300%, while reducing electricity use by 20-30%, water consumption by 70% and chemical use by 60%. The company has also already installed a 1.8MW captive solar plant to advance its ambitions of running a more environmentally sustainable operation. The new funding will also enable further investments in sewing machines that will expand production capacity and contribute to increasing the number of garments produced per hour.