With plans aimed at opening out to a larger subcontinent in the future, Brandix-managed Textured Jersey has expansion plans in mind following the Initial Public Offering (IPO) in July.
The IPO, set to raise US$11 million or Rs.1.2 billion at Rs.15 per share from 80 million shares amounting to 12.2% of the company, will be used to increase its capacity and engage in an expansion worth US$13-14 million, Brandix CEO Ashraff Omar told the Business Times on Thursday.
Currently there is space to expand within the land area in Avissawella where the plant is situated but once the funds are raised it would take about six months to get it off the ground, he said.
The funds will be utilized for the construction of a modern production facility at US$3.2 million or Rs.344 million; purchase of knitting, dyeing, finishing machines at US$9.2 million or Rs.1 billion; and a water treatment plant at US$0.75 million or Rs.82 million.
The IPO would result in Textured Jersey becoming a “more professionalized” organization with the infusion of some young people, he said.
Pacific Textiles, a controlling shareholder at Textured Jersey currently with a 60% stake, will see its stake reduced to 40% after the IPO while Brandix will own 30.08% and the public 29.92%.
With Pacific Textiles being one of the largest manufacturers in knitted fabrics and the most profitable based in Hong Kong, “we have been thinking how to make it into a professional setup and have leveraged their clout of Textured Jersey in the region,” Mr. Omar said.
The two organizations together will continue to own over 50% in Textured Jersey for five years from the date of the IPO in a bid to maintain control within the company.
Funds raised from the Rs.15 per share sale of a little more than 20% of the company in a private placement to about 47 parties in April amounted to US$16 million, Mr. Omar said.