The World Bank’s private lending arm International Finance Corporation is in negotiations to lend Kenyan rose flowers farming company, Subati Group, Sh1.2 billion (EUR 10 million).
Subati Group is owned by a scion of the wealthy Chandaria family that is also associated with plastics manufacturer KenPoly and the Guaranty Trust Bank, formerly known as Fina Bank before the family’s sale of its majority stake to the Nigerian lender.
The loan will provide part financing for a three-year Sh2 billion ($19.5 million) expansion plan for Subati to upgrade its existing rose farms, set up a new 15 hectare rose farm, and to grow its herb production.
The company also plans to build a cold storage facility, a water treatment plant, and to install solar panels on its farms as part of climate mitigation measures endorsed by the International Finance Corporation.
“The investment will enable the company to consolidate its leading position in the high-end rose export market by increasing scale and offering a wider product mix; and diversify its sales through additional high-margin business of fresh herb exports,” says IFC in a disclosure note.
The company is fully owned by the Chandaria and Patel families.
One of the farms is a 100-hectare land in Subukia which was formerly a dairy farm, and which the company acquired in 2008.
In 2012, the company acquired a 36-hectare farm in Naivasha and in 2015, Subati bought 323 hectares of land in Kibwezi on the western bank of the Galana River.
120 types of roses
Subati grows 120 different varieties of roses, producing 55 million steps per year.
It sells them to wholesalers and florist chains abroad.
The disclosures indicate that Subati currently employs 2,000 people in its greenhouses and plans to hire at least 700 more following the expansion.
The IFC expects that the investment in Subati will help develop Kenya’s fresh herb market in Kenya and provide evidence that these plants can be grown alongside roses.
Due to concerns about the environmental impact of flower farming in Kenya, the IFC says it is setting high standards for water and resource management.
Horticulture is one of Kenya’s biggest foreign exchange earners.
In the six months to June 2017, the sector earned Sh64 billion up from Sh58 billion during a similar period last year, according to data from the Agriculture and Food Authority.