Sachen Chandaria has revealed plans to sell its factory, Orbit Products Africa Limited (Opal), to Mauritius-based Grit Real Estate Income Group for nearly Sh6 billion.
This will enable it to repay a loan of more than Sh2.5 billion he took from NCBA Bank Kenya.
Grit has signed an agreement to buy Opal’s manufacturing and warehousing facilities in Mlolongo.
It will lease them back to the firm for an initial 25 years, with an option to extend the tenancy for 10 years according to Business Daily.
Chandaria Business Chain
Mr. Sachen is part of the larger Chandaria industrialist family that includes businessman Manu Chandaria.
The transaction has further been structured in a way that will see Mr. Sachen pocket some of the money.
Other amounts will additionally be used to settle the NCBA loan and further expand the manufacturing facilities.
The exact amount Opal owes NCBA was not immediately clear according to Business Daily.
“This innovative sale and leaseback transaction is amongst the largest across the sub-continent.
The strategic partnership with Grit represents a significant long-term undertaking by Orbit.
It further reaffirms our commitment to Kenya and the region,” said Mr. Sachen in a statement.
Opal is the contract manufacturer for global firms such as Reckitt Benckiser, Colgate-Palmolive, and Unilever at the 20-acre site.
The company has operated in Kenya for close to 50 years and employs more than 600 people in the region.
“It is further expected that because of the increased manufacturing capacity post the transaction, factory, and middle-management headcount will expand.
This is by between 20 percent and 25 percent, resulting in approximately 100 jobs being added,” Grit said in a statement.
Grit is further funding the investment from loans from the International Finance Corporation (IFC) and private equity firms.
The IFC is additionally providing $25 million (Sh2.7 billion).
The Ethos Mezzanine Partners GP Proprietary Limited and BluePeak Private Capital GP will invest $31.5 million (Sh3.5 billion) in a bond to be issued by Grit.