Announcement of IFC Investment in Mulco Textiles Limited, Uganda on May 12, 1965

IFC Press Release No. 65/5 Subject: IFC Investment in For Release AM Newspapers Mulco Textiles Ltd., Uganda Wednesday, May 12, 1965 The International Finance Corporation (IFC), an affiliate of the World Bank, today announced its first investment in Uganda. The investment will as- sist in financing Mulco Textiles Limited (MULCO), a new company organized to establish a fully integrated cotton textile mill at Jinja, near Lake Victoria. The estimated cost of the project is ~2,760,000 (equivalent to $7,728,000). I ' Three investment institutions in the United Kingdom and Kuwait are partici- l f ' r pating in the IFC co1DC1itment to provide $3,514,000 in loan and share capital. I . The Standard Bank Finance and Development Corporation, an affiliate of 4I The Standard Bank Limited of London, is participating to the extent of L350,000 ($980,000). Barclays Overseas Development Corporation, a subsidiary of Barclays D.C.O. of London, is making a participation amounting to L61,,500 ($172,000). Kuwait Investment Company of Kuwait is participating in the amount of ~50,000 ($140,000). The MULCO mill, which will use Ugandan cotton, is to be cequipped with 24,220 spindles and 450 looms as well as finishing equipment for bleaching and dyeing. Its principal products will be gray cloth and piece dyed fabrics. At full operation, it is exp~cted that the company's annual production will be in excess of 18 million square yards of textiles. Sponsor of the project is the Muljibhai Madhvani group, which conducts a wide range of manufacturing and trading operations in East Africa. The two • principal companies in the group are Madhvani Sugar Works Lim:Lted, one of the largest sugar producers in East A(rica, and Muljibhai Madhvani and Company Limited, which maintains a number of trading branches in key centers in East  • - 2 - Africa and also acts as a holding and managing company for the group's interests in steel, glass, brewing, matches and other industries. The IFC investment consists of a loan of Ll,000,000 ($2,800,000), a sub- scription to shares of th~ company at par, in the amount of EA Sh 4,600,000 ($644,000), and a standby commitment of EA Sh 500,000 ($70,000). The Standard Bank Finance and Development Corporation's participation includes EA Sh 1,000,000 ($140,000) of the share capital. The Barclays Overseas Development Corp~ration's participation in the share capital is EA Sh 230,000 ($32,000). The remainder of the share capital is being subscribed by the Madhvani group and by other private Ugandan investors. MULCO is expected to benefit from the tariff-free movement of tE~xtiles between Uganda, Kenya and Tanzania, which together form the East African Conmon Market area. The company's entire output will be sold within this region, ~ affording a potential market of over 25 million people. Local consumption of textiles, at present largely satisfied by imports, has been growing in recent years at a rate of about five per cent annually and total consumption is ex- pected to exceed 260 million square yards by 1970. This investment in Uganda raises to 32 the number of countries in which IFC has now made commitments. Uganda has been a member of IFC since September 1963. •