Carlyle Group LP, the world’s second-largest private-equity firm, is close to signing investment deals in sub-Saharan Africa to tap into rising consumer spending on the world’s poorest continent.
Carlyle came to the region two years ago and has opened offices in Johannesburg and Lagos, Nigeria’s commercial capital, amid plans to invest $500 million. It was part of group that invested $210 million in Export Trading Group, a Tanzanian agricultural commodity company, last year, the only African deal it’s concluded to date.
“We have other investments that are either on the verge of being completed or in the pipeline,” David Marchick, Washington-based Carlyle’s managing director, told reporters in Cape Town today. “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 projected 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 to a decline of 17 percent in China to 179 transactions, according to the Emerging Markets Private Equity Association.
Carlyle wants “to tap into the growth that we have seen in Africa over the last few years,” said Marlon Chigwende, Carlyle’s managing director and co-head for sub-Saharan Africa. “We like the quality of the growth. We think that is sustainable over the medium to long term. We think there are incredible opportunities to help fast-growing medium-sized companies grow even faster.”
With Africa holding some of the world’s largest reserves of minerals including gold and tin and with fast expansion in the use of technology including mobile phones, private-equity investments in the region have focused mainly on natural resources and telecommunications.
Carlyle is interested in “anything that touches the consumer, fast-moving consumer goods, agriculture, mobile telephony, financial services,” Chigwende said. Two-thirds of recent growth in Africa “has been consumer related.”