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Fund’s success ‘reflects economic confidence’ in sub-Saharan Africa

Out-Law News | 30 Apr 2014 | 3:33 pm | 2 min. read

Alternative asset manager The Carlyle Group has announced the final close of the 'Carlyle Sub-Saharan Africa Fund' at $698 million – exceeding its initial target of $500m by 40%.

Carlyle said the fund has “strong support from African investors and also attracted a significant amount of international capital from investors around the world”, including first-time investors in Africa.

The managing director and co-head of Carlyle’s sub-Saharan Africa advisory team Marlon Chigwende said: “The success of the fundraising reflects investors’ appetite for the strong economic growth that the region has experienced over the last decade, as well as the prospects for future economic development across the continent.”

The fund, which Carlyle said “has a focus on investment opportunities linked to the growth of the emerging middle class across sub-Saharan Africa”, is expected to focus on the consumer, logistics, financial services and telecommunications sectors.

The fund has made two investments to date – Export Trading Group, an African based supply chain manager headquartered in Tanzania and J&J Africa, a logistics business with its headquarters in Mozambique.

Carlyle’s co-founder and co-chief executive officer David Rubenstein said: "Carlyle has been an early mover in emerging markets, including China, India, Brazil and the Middle East and North Africa region, and we are optimistic about prospects for investing in sub-Saharan Africa. The region has been the fastest growing developing market in the world outside of China, and we have a strong, experienced, local team in the region. We are very pleased with investor interest in this strategy."

Carlyle is a global alternative asset manager with about $189 billion of assets under management across 118 funds and 106 fund of funds vehicles as of 31 December 2013. Established in March 2012, Carlyle’s sub-Sahara Africa team advises on buyout and growth capital investments in private and public companies from offices in South Africa and Nigeria.

The African Development Bank Group (AfDB) invested $50m in the fund at an early stage. Bank president Donald Kaberuka said: “Private sector investment is one of the key ingredients in this continent taking charge of, funding and managing its own development destiny. This success shows another route through which the world can invest in Africa, a new global growth pole.”

According to AfDB, the fund will seek to invest in large national companies looking to expand across regions. “It hopes to lead in the transformation of single-country companies to regional platform companies," the bank said. “The fund’s investment team has reviewed deals in a wide range of countries in the region, including Angola, Botswana, Ghana, Cote d’Ivoire, Mauritius, Mozambique, Namibia, and Zambia.”

AfDB said: “With investment interest in Africa at an all-time high, private equity and other investment will play a critical role in the development of African economies in the coming years.”

A survey published in March 2014 by Deloitte and Africa Assets said private equity funds invested more than three times as much in sub-Saharan Africa in 2013 as they did in 2012. A total of 84 deals were completed in the region in 2013, 46 of which reported total values of $3.69bn, according to Africa Assets data.

However, the survey said private equity in Africa is “still a young and volatile industry”. The large investment total in 2013 was “sector-specific” – led by three large energy-related deals that together accounted for 63% of the year’s total reported investment. “In 2011, the top three deals by value only accounted for 43% of the year’s total, and were spread across three different sectors. The largest deal done in 2012 barely topped $200m,” the survey said.

According to the survey, Kenya accounted for 46% of the total number of deals in Eastern Africa and 69% of total reported values. “This reflected the views by respondents, in all our surveys, that Kenya remains a top destination country in Eastern Africa as well as Africa wide.” The survey said the “key deal” in Kenya in 2013 related to Norway’s Norfund and Africa Infrastructure Investment Manager investment of $60m in equity to build a wind power project in Kenya worth $150m – $90m of which would be funded by debt from the Standard Bank Group.