Textiles cluster to get $100m investment boost

GROWTH POTENTIAL: SV Pittie Sohar Textiles plans IPO to help raise new funding for forward integration strategy

Boding well for the growth of an integrated textile cluster in Oman — the first of its kind in the entire Gulf region — SV Pittie Sohar Textiles has pledged a further investment of $100 million to add value to its flagship textile mill in Freezone Sohar through a forward integration strategy.

According to Vinod Pittie, Chairman of Shrivallabh Pittie Group, which owns a majority stake in the yarn manufacturing plant in Suhar, the additional investment will be raised via an Initial Public Offering (IPO) to be floated on the Muscat Securities Market (MSM).

This is a “long-term’ project that will build on the four-unit yarn manufacturing plant currently under development in the free zone with an investment of $300 million, said Pittie.

“Once we have completed our $300 million investment, we will embark on a further expansion through forward integration. (In this phase), we would like to set up fabric manufacturing, process houses and other capacity for home furnishing, stitching, garmenting, and so on.”

Pittie made the revelations at a press briefing on Thursday to announce the formal inauguration of the second unit of the plant’s 4-unit complex in Freezone Sohar. The unit, which is already operational, will be formally opened by Manpower Minister Shaikh

Abdullah bin Nasser al Bakri on November 20. Units 3 and 4, which are currently under construction, are due to be brought into operation before the end of 2020 or by March 2021, he said.

The Group Chairman declined to give a timeframe for the flotation of the IPO, noting however that the “structuring and paperwork” associated with the proposed listing is ongoing. In September, local bank Sohar International announced that it has been appointed as financial advisors of SV Pittie Sohar Textiles for its capital raise and public offering.

Significantly, the proposed $100 million expansion project will seek to leverage the Sohar project’s yarn output, said Pittie. “Yarn is the core of the textile industry, making it easy and cost-effective for forward integration,” he stated.

SV Pittie Sohar Textiles is also preparing to launch a special scheme, dubbed ‘SME Connect’, to enable Omani SMES to participate in valueadd businesses that can capitalise on the availability of yarn in the free zone and elsewhere, said the Chairman.

“The textile industry has the potential for develop small and medium enterprises. We are inviting SMES under the scheme, whereby they can set up a project, and will support them with their raw material requirements, (offtake) your finished product, help them with funding support from banks, and keep supporting them until they are confident enough to run the operation on their own.”

Two Omani government pension funds have a 10 per cent equity stake each in SV Pittie Sohar Textiles, while the balance 80 is held by India-based SV Pittie Group.