US-based investment firm Carlyle has launched a sub-Saharan Africa fund by raising US$698mn from African and international investors who seek to profit from the region’s growing economy
According to reports, the company has also raised almost US$200mn above its initial target.
Marlon Chigwende, co-head of the firm’s sub-Saharan Africa buyout advisory team, said that the fund would focus on investments in the consumer, logistics, financial services and telecommunications sectors.
Till date, Carlyle has made two investments — a supply chain Export Trading Group, headquartered in Tanzania and a logistics business J&J Africa, based in Mozambique.
Chigwende added that the success gained by raising these funds indicated the interest shown by investors in Africa, due to the steady economic growth over the last decade.
Sub-Saharan Africa attracts a tiny proportion of the world’s private equity cash — only a quarter of the amount invested in India alone, on a basis adjusted for gross domestic product — but that is beginning to change, added reports.
A survey by Deloitte and Africa Assets revealed that the number of private equity deals in Africa tripled last year compared to the level in 2012, mainly driven by a growing number of higher-value deals in the energy sector. The report added that confidence for private equity in Africa is ‘certainly increasing’.
Investors like Carlyle are being drawn to the continent’s rapidly-growing middle class.
David Rubenstein, co-founder of Carlyle, said, “The region has been the fastest growing developing market in the world outside of China."
However, experts have admitted that tapping into this growth is not without risks.
Earlier in April 2014, the International Monetary Fund (IMF) cut its sub-Saharan Africa 2014 growth forecast by 0.7 of a percentage point to 5.4 per cent, citing concerns about domestic strife and shaky demand for natural resources. “External risks are particularly important for natural resource exporters, which could suffer from a slowdown in emerging markets and a shifting pattern in China from investment- to consumption-led growth,” added IMF's report.
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