Orbit Products Africa Limited (Opal), owned by Manu Chandaria kin Sachen Chandaria is set to sell its factory in Mlolongo to Mauritius-based Grit Real Estate Income Group for Ksh6 billion.
This comes even as the company looks to clear a loan burden owed to creditors, with at least Ksh2.5 billion owed to the NCBA Bank.
“This innovative sale and leaseback transaction is amongst the largest across the sub-continent, with the strategic partnership with Grit representing a significant long-term undertaking by Orbit and reaffirms our commitment to Kenya and the region,” said Mr Sachen in a statement.
Even after buying the factory, Grit will lease the manufacturing and warehousing facilities back to the firm for an initial 25 years, with an option to extend the tenancy for 10 years.
“Proceeds from the transaction will substantially further strengthen our balance sheet, positioning Orbit for expansion and product and category extensions, to better service and support the ambitious growth plans of our pan-regional and multinational customers,” added Sachen.
Opal, which has operated in Kenya for over 20 years, is the contract manufacturer for Reckitt Benckiser, Colgate-Palmolive and Unilever.
The factory and warehousing facility stands on a 20-acre piece of land and employs over 600 people across the region.
“It is further expected that because of the increased manufacturing capacity post the transaction, factory and middle-management headcount will expand by between 20 percent and 25 percent, resulting in approximately 100 jobs being added,” said Grit.
Grit plans to raise the money through bonds from International Finance Corporation (IFC) which will invest $25 million (Ksh2.7 billion), and Ethos Mezzanine Partners GP Proprietary Limited and BluePeak Private Capital GP which will invest $31.5 million (Ksh3.5 billion).