Sheraton Textiles finds IDC seeking a strategic investment partner
Sheraton Textiles Seeks Strategic Equity Partner for Turnaround
Sheraton Textiles, a long-standing designer and manufacturer of household linen and accessories since 1920, is seeking a strategic equity partner to bolster its business and navigate the challenging economic environment in South Africa. The Industrial Development Corporation (IDC) is actively looking for such a partner for the company.
The textile industry in South Africa has been facing deindustrialization pressures, making it crucial for companies like Sheraton Textiles to find solid equity partners to remain competitive. The IDC has approved R21,4-million in funding for a turnaround plan to support Sheraton's board and management.
The primary reasons for seeking a strategic equity partner are financial support, operational expertise, market expansion, and navigating economic challenges. The partner is expected to inject new capital, bring industry knowledge, improve governance practices, provide access to new markets, and help Sheraton Textiles better compete in the challenging economic environment.
The potential benefits of such a partnership include increased competitiveness, financial stability and growth, job retention and creation, and long-term strategic guidance. The partnership could lead to improvements in operational efficiency, product innovation, investment in modern machinery, marketing, and research and development, and safeguarding existing jobs while potentially creating new employment opportunities.
The IDC has not disclosed the identity of the potential strategic equity partner it is considering for Sheraton Textiles. However, the IDC has previously invested R140-million into a state-of-the-art production facility at Sheraton's Diep River plant in May 2024. The IDC also approved the sale of a 15% share in Sheraton to a newly established workers' trust for a nominal amount.
The turnaround plan for Sheraton Textiles aims to diversify its customer base to address its over-reliance on the retail market and improve efficiencies while exploring cost savings. The plan has not yet delivered the intended results, as the company continues to generate losses, with a net loss of R16-million for the 2024 financial year, following a loss of R23m in 2023.
The challenging economic environment was exacerbated by Sheraton's reliance on retail clients who had been trading below expectations due to adverse economic conditions. The IDC, in its Development Report 2018-2022, stated that it has established 110 workers and 45 community trusts, including 24 community trusts funded under the Renewable Energy Independent Power Producer Procurement Programme.
Ebrahim Patel, Minister of Trade, Industry and Competition, stated that this investment aligns with the government's localisation and industrialisation initiatives. The IDC initially invested in Sheraton in 2009 as part of a business rescue process in support of the SA government's strategy to support the textile industry.
Sheraton Textiles' search for a strategic equity partner aims to secure necessary investment and industry expertise to sustain and grow its operations amid economic headwinds in South Africa's textile sector. The company's turnover was reduced by 10% from 2023 due to a depressed retail market, and the transfer of shares to a workers' trust was imminent, according to the IDC's 2026 Annual Performance Plan.
- In order to sustain and grow its operations within the challenging economic environment of South Africa's textile sector, Sheraton Textiles is seeking a strategic equity partner.
- This potential partner is expected to bring industry knowledge, improve governance practices, provide access to new markets, and help Sheraton Textiles better compete, while injecting new capital for financial support.
- The turnaround plan for Sheraton Textiles aims to address its over-reliance on the retail market, improve efficiencies, and explore cost savings – all key elements of sustaining a business in the retail industry.
- The partnership may lead to job retention and creation, as well as long-term strategic guidance in areas like operational efficiency, product innovation, and research & development – essential components for the energy and business sectors.
