Absa Bank Kenya lends Sh3bn to Kenya Wines Agencies Limited (Kwal) for factory construction

Absa Bank Kenya is lending Sh3 billion to Kenya Wines Agencies Limited (Kwal) to fund the construction of its distillery plant at Tatu City.

The bank says it got the approval to lend the cash after a competitive bid in the market and has already made the loan available for use. The factory being built by Kwal is meant to increase production and expand its product range in the alcoholic beverages market.

“The facility becomes available as the project continues and they draw it when they achieve milestones of the project,” James Agin, the regional corporate banking director at Absa, said of the Kwal loan.

Kwal, with a portfolio of wines, spirits, and ready-to-drink beverages, is investing a total of Sh4 billion in Tatu City.

This includes the construction of new office space, factory, warehouse, and packaging capacity. It spent Sh1.1 billion to acquire a total of 30 acres of land at Tatu City.

Kwal said the project is 35% complete and is expected to be concluded by August.

The ongoing investments by Kwal come at a time when its parent firm, Distell Group of South Africa, is in the process of being acquired by Dutch brewer Heineken.

The transaction is expected to result in a reorganisation of Distell and Heineken’s operations in Kenya and elsewhere which have been running separately.

Heineken says the manufacturing and marketing of products imported into Kenya will be co-ordinated from South Africa once the tie-up with Distell is completed.

The Heineken distribution businesses in Tanzania, Uganda, Kenya, and South Sudan will be transferred to a South African subsidiary called Sunside Acquisitions Limited which will be jointly owned by Heineken and Distell.

The loan to the alcohol manufacturer adds to Absa’s list of big-ticket credit facilities under its corporate banking division.

Other firms that have been funded by the bank are East African Breweries Plc (EABL) and Mabati Rolling Mills.

“Corporate banking still remains a key pillar for the Absa Group in terms of our service offering to our customers,” Mr. Agin said.

“We are very clear about our ambition to be a partner of stories and a trusted advisor to our customers as they go through their growth ambition.”