Sheraton Textiles looks for a strategic investment partner, according to International Data Corporation's search.
Sheraton Textiles Seeks Strategic Equity Partner for Transformational Change
Sheraton Textiles, a 100% subsidiary of the Industrial Development Corporation (IDC), is in search of a strategic equity partner to support the company through a period of transformational changes. This move comes as the textile company, which has been in operation since 1920, grapples with challenging economic conditions and poor trading conditions that have persisted since the pandemic.
The economic environment has been exacerbated by Sheraton Textiles' reliance on retail clients who have been trading below expectations due to adverse economic conditions. As a result, the company's turnover decreased by 10% from 2023, and it incurred a net loss of R16-million for the 2024 financial year, following a loss of R23m in 2023.
To address these issues, the IDC approved R21,4-million in funding for a turnaround plan to support Sheraton's board and management. The plan aims to diversify the company's customer base to address its over-reliance on the retail market and improve its operational efficiency.
The IDC's 2026 Annual Performance Plan also includes the registration of Sheraton's workers' trust, with the transfer of shares imminent. As part of this plan, the IDC approved the sale of a 15% share in the company to the workers' trust for a nominal amount.
In addition to these measures, the IDC has invested R140-million into a state-of-the-art production facility at Sheraton's Diep River plant in May 2024. The IDC has also invested R1,6-billion to support employee stock ownership plans (ESOPs) and related worker and community trusts, including the establishment of 110 workers and 45 community trusts.
Minister of Trade, Industry and Competition (DTIC), Ebrahim Patel, stated that this investment aligns with the government's localisation and industrialisation initiatives. The aim is to revitalize Sheraton's operations and business model to address deindustrialization pressures in South Africa.
With the strategic equity partner, the company hopes to strengthen its sustainability in an increasingly competitive textile industry, inject new capital and strategic guidance, and modernize its production and product offerings. The partnership is also expected to align Sheraton more closely with national industrial development goals to mitigate the broader challenges of deindustrialization in South Africa.
In summary, the IDC is seeking a strategic equity partner for Sheraton Textiles to drive a necessary transformation, attract investment, and secure the company’s future through enhanced capabilities and market repositioning.
- To bolster its sustainability in the competitive textile industry, Sheraton Textiles is seeking a strategic equity partner for transformational change, hoping to inject new capital, strategic guidance, and modernize its production and product offerings.
- The partnership aims to address deindustrialization pressures in South Africa, aligning with the government's localisation and industrialisation initiatives as stated by Minister Ebrahim Patel.
- The textile company also hopes the partnership can help diversify its customer base, primarily relying on retail clients, to improve operational efficiency and address the poor trading conditions it has faced.
- Additionally, the partnership is expected to help Sheraton Textiles align more closely with national industrial development goals, mitigating broader challenges of deindustrialization in the country.
