HBM
In March 2016, the KZN Growth Fund (‘the Fund”) approved R42.5m debt funding towards the setting up of the second condom manufacturing facility in the country. This resulted in the Fund being the only funder to the project.
KZN Growth Fund played a leading role is assisting the project promoters with structuring of the transaction. This included leading negotiations, for better terms, with the foreign partner.
With the fund being KZN based, KZN Growth Fund was able to work closely with the project promoters in ensuring that the project was appropriately structured, all risks adequately assessed and mitigants put in place and financial close reached. Additionally, the Fund assisted in facilitating in utilising sister agencies, namely: the Dube TradePort and Trade and Investment KZN in providing the best solution for the project. The Fund continues to work closely with the project being instrumental in ensuring the successful establishment of the plant takes place as smoothly as possible.
For KZN Growth Fund, the investment in the project contributed significantly in driving the country and provincial mandate which includes the following:
- Localisation of manufacturing: The facility will manufacture condoms primarily for the supply to the government free-issue condoms which are currently mainly imported. This project will therefore contribute by localising the manufacturing of a product that is predominantly being imported.
- Localisation of earnings: With the company being 75% locally owned, the bulk of profits will be retained in South Africa.
- Forex Inflows: When the company begins to export its condoms to the rest of the continent, the country will benefit in terms of forex inflows.
- SMME Spin-offs: The existence of this facility in the country will provide spin-off opportunities for small and medium enterprises in the respective value chains.
- Skills transfer: International skills and technical expertise relating to the operation of the plant will be transferred to local individuals by the international partner.
- Foreign Direct Investment: The project will result in foreign direct investment through the 25% investment by an American entity.
- Creation of Black Industrialist: The project also contributes to promoting the creation of Black Industrialist, as 38.3% of the shareholding is by black individuals who are actively involved in the running of the business.
-
Employment Creation: A total of 145 employment opportunities will be created by the manufacturing facility.
