THE CARLYLE Group, the second-largest private equity firm, is close to signing investment deals in sub-Saharan Africa to tap into rising consumer spending.
Carlyle came to the region two years ago and has opened offices in Johannesburg and Lagos in Nigeria, amid plans to invest $500 million (R4.5 billion). It was part of a group that invested $210m in the Export Trading Group, a Tanzanian agricultural commodity firm, last year, the only African deal it has concluded to date.
“We have other investments that are either on the verge of being completed or in the pipeline,” Carlyle managing director David Marchick said in Cape Town on Friday.
“We have a very broad pipeline of deals. We are active in a number of sectors in a number of countries.”
Global buyout companies are paying increased attention to Africa as they seek to diversify away from Western economies to earn higher returns.
Sub-Saharan Africa’s economy grew 4.7 percent last year and is forecast to grow 5.5 percent this year, according to the International Monetary Fund.
Private equity transactions in the region jumped by 19 percent to 43 deals in the first nine months of last year, compared with a decline of 17 percent in China to 179 deals, the Emerging Markets Private Equity Association said.
Carlyle wanted “to tap into the growth that we have seen in Africa”, Carlyle managing director and joint head for sub-Saharan Africa Marlon Chigwende said. “We like the quality of the growth. We think that is sustainable over the medium to long term.”
With Africa holding some of the largest reserves of minerals and with fast expansion in technology use, private equity investments have focused mainly on natural resources and telecommunications.
Carlyle was interested in “anything that touches the consumer”, Chigwende said. Two-thirds of recent growth in Africa “has been consumer related”. – Bloomberg