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Carlyle Group launches new Private Equity fund for Africa, Aims for $500 Million

By on March 19, 2012

About a year after it launched an investment team for sub-Saharan Africa, US-based private equity firm, The Carlyle Group, is raising a new fund focused on the region.

 The Carlyle sub-Saharan Africa Fund comes hot on the heels of setting up the Johannesburg-based team to pursue investment opportunities on the continent.

At the moment, the firm has investments in Europe, Asia and North America. It first debuted in the emerging markets in 1999, investing in Asia.

East Africa is one of the regions, where the fund is eyeing opportunities.

The region is home to two countries — Kenya and Tanzania — out of the seven that it considers attractive.

The other countries, which are expected to be part of its initial investment anchor countries, made attractive by political stability and rapid economic growth, are: Ghana, Tanzania, Botswana, Benin, Nigeria and South Africa.

Already, the African Development Bank has announced plans to be among the investment vehicle’s first investors, indicating that its board has approved an equity investment of $50 million.

According to AfDB, the Carlyle Sub-Saharan African Fund’s portfolio at exit would comprise a mix of buyout and growth capital investments in 15 countries across the region.

“The fund plans to invest a total of $500 million, with the potential to double this amount through co-investment with other Carlyle global funds,” it said in a statement.

It will target investments in large national companies seeking intra-regional market expansion and vertical integration across neighbouring countries.

Already, the fund’s investment team has reviewed a number of deals drawn from the region including Angola, Botswana, Ghana, Côte d’Ivoire, Mauritius, Mozambique, Namibia, and Zambia.

Besides the investment, AfDB has helped Carlyle establish a fully-fledged environmental and social management system, and a development outcomes tracking system, to monitor job creation, tax revenues and incremental capital flows to portfolio companies.

The AfDB is counting on the Carlyle Fund to balance its equity portfolio to pave way for more investments in riskier market segments, says Tim Turner, the bank’s director for private sector operations.

“We believe Africa is set to welcome such investors and we hope Carlyle’s example will be followed by other global private equity firms.”