Hela strategic investment discussions are accelerating as the apparel manufacturer seeks fresh capital to stabilise its weakened balance sheet after reporting deeper interim losses. The company expects the infusion to support its subsidiaries and strengthen its long-term recovery strategy.
Hela strategic investment aims to revive finances amid rising losses and restructuring efforts
Hela Apparel Holdings PLC is moving steadily toward securing a substantial capital infusion as part of a comprehensive turnaround programme designed to restore financial stability after a challenging first half of the 2025/26 financial year. The company, which is negotiating a Hela strategic investment package valued between Rs. 3 billion and Rs. 4.4 billion, confirmed that shareholder approval has already been obtained, with the move expected to materialise in the latter part of the financial year.
The planned capital raising is central to reinforcing the company’s balance sheet after a period of prolonged financial pressures. Alongside talks with potential strategic investors, existing shareholders are preparing to contribute nearly Rs. 1 billion. The funds will be deployed largely to support subsidiaries that were flagged in mid-2025 for experiencing a serious erosion of capital, where net assets had dropped below stated capital. Management views this combined investment as critical to stabilising operations and rebuilding resilience across the group.
Hela’s financial performance for the six months ending September 30, 2025, reflected the depth of these challenges, with the company reporting a consolidated loss of Rs. 4.1 billion. This marked a significant increase from the Rs. 2.98 billion loss recorded in the corresponding period of the previous year. Revenue also fell sharply to Rs. 32.3 billion from Rs. 42.98 billion, underscoring the impact of a difficult global operating environment and persistent market disruptions affecting apparel exports.
Despite the decline in financial results, the group reported important progress in restructuring its debt obligations. During the first half of FY 2025/26, Hela completed a major restructuring arrangement covering Rs. 15.1 billion in bank borrowings. Under the revised terms, the facilities were converted into a nine-year term loan with a one-year grace period on principal repayments, carrying an interest rate of SOFR plus 1 percent for the initial two years. This restructuring builds on the Rights Issue completed in October 2024, which raised Rs. 1.6 billion to settle borrowings tied to subsidiary Foundation Garments (Pvt) Ltd.
Details surrounding the group’s recovery momentum emerged as it released its delayed Annual Report for FY 2024/25, shortly after the Colombo Stock Exchange issued a notice warning of a potential trading suspension should the submission be further delayed. The company’s auditors issued a disclaimer of opinion on the annual accounts, pointing to uncertainties related to going concern status due to overdue payables and a net liability position. However, the Board maintains confidence that the restructuring measures and the anticipated Hela strategic investment will collectively strengthen liquidity and restore operational normalcy over the medium term.
The company’s shareholding structure as of September 30, 2025, continues to be anchored by Lesing Hela Limited, holding a controlling 48.43 percent stake. Tars Investments Lanka (Pvt) Ltd. followed with a 15.15 percent holding, while P.L.D. Jinadasa accounted for a total direct and indirect ownership of approximately 11.34 percent. Other notable shareholders included D.E.H. McVey with 1.87 percent and Hatton National Bank PLC / Sri Dhaman Rajendram Arudpragasam with 0.89 percent. The public float remained at 24.39 percent. Such a mix of institutional and individual investors underscores the corporate interest in ensuring Hela’s stability and long-term value.
Listed on the Colombo Stock Exchange in February 2022, Hela has since navigated multiple industry headwinds, from global supply chain pressures to weakening export demand. The company’s reliance on restructuring and renewed capital inflows reflects the broader challenges facing Sri Lanka’s apparel sector, where operational costs, shifting buyer preferences, and evolving compliance requirements have weighed heavily on performance. However, management’s push to secure strategic capital marks a deliberate shift from short-term survival to future-driven transformation.
The company’s turnaround hinges significantly on deepening operational efficiencies, revitalising subsidiary performance, and ensuring liquidity support throughout its production network. The pursuit of a Hela strategic investment also signals growing interest among international investors seeking advanced manufacturing partnerships in Sri Lanka. If finalised, the partnership could provide not only financial backing but also strategic insights, market access, and operational guidance, helping the group strengthen competitiveness and reinforce its global supply chain relationships.
While the road to recovery remains demanding, ongoing restructuring efforts, strengthened governance, and fresh capital initiatives place Hela on a more stable trajectory. With global apparel markets gradually recalibrating, the company aims to leverage its renewed financial footing to rebuild momentum in the coming year. The outcome of the investment negotiations will likely serve as a decisive factor in shaping how effectively the group can navigate its revival and return to sustainable growth.