Carlyle comes back with next Africa fund

Carlyle Group is raising its second Africa fund after deploying around 90 percent of the capital from its debut pool, which closed on around $700 million in 2014, according to a person with knowledge of the fund.

How much Carlyle will target for Fund II is unclear. A Carlyle spokeswoman declined to discuss fundraising.

While Carlyle’s debut pool was raised in a environment of much hype for investment in Africa, that enthusiasm has been tempered over the past few years amid slowing growth and a recession last year in South Africa.

As well, limited partners are finding enough opportunities in developed markets, so they have less desire to put money at risk in emerging economies, sources said.

Carlyle has invested around $400 million in nine companies in the past three years, according to Eric Kump, head of Carlyle’s Sub-Saharan Africa fund, who spoke on a panel at the IFC EMPEA Global Private Equity Conference in Washington on May 14. Overall, Fund I has invested in 13 companies, Carlyle’s website shows. 

Prices on those investments were about 30 percent below their international comparables, Kump said. Carlyle is doing control investments in the middle-market companies, targeting deals from $30 million to $50 million, Kump said.

One thing that needs improvement in Africa is the development of capital markets, Kump said. “I’d like to see the exit options develop further,” he said.

Kump, who joined Carlyle in 2010, took over the Africa program in 2016, the firm said at the time, in a statement announcing promotions. The former co-head, Marlon Chigwende, left to form his own shop.

The group has invested in several different strategies, including pharmaceutical products company Abacus; Traxys Group, which provides financial and logistical services for the metal and mining industries, and credit ratings firm Global Credit Ratings.

Action Item: Read more about Carlyle’s Africa strategy here: https://bit.ly/2E7cIbi