AFRICA – Carlyle Group, an American multinational private equity, alternative asset management and financial services corporation, is spinning out its Sub-Saharan African team to Alterra Capital, a new company formed by the managers of its US$700m regional fund.
The private equity firm will move the team, which includes Eric Kump, Genevieve Sangudi, Bruce Steen and Idris Mohammed, to Alterra Capital Partners from July.
Alterra Capital Partners will assume the management of the fund as sub-advisers to Carlyle, which will continue to invest in the continent through a strategic relationship with the new firm and its international energy fund, the person said.
The team will continue to be based in Johannesburg and Lagos.
Launched in 2011, this fund invests in Sub-Saharan Africa with a particular focus on South Africa, Nigeria, Kenya, Tanzania, Ghana, Mozambique, Botswana, Zambia and Uganda.
The Sub-Saharan fund completed 10 deals of more than US$400m in the past three years, including the purchase of a majority stake in promotional products and clothing distributor Amrod, and in health and occupational safety business Nosa Group.
“Carlyle confirms that it has reached an agreement with the Carlyle sub-Saharan Africa Fund team to transition them to a standalone business, Alterra Capital Partners,” the Washington-based company said in an emailed response to questions from Bloomberg.
“Carlyle continues to believe Africa is an important region strategically and maintains its active presence on the continent.”
But, the Washington D.C.-based firm said it would no longer pursue an Africa-dedicated buyout fund to succeed its US$700 million Carlyle Sub-Saharan Africa Fund, which it raised in 2014.
This made Carlyle the latest private equity giant to reduce its African exposure and underscored the challenges of deal-making for Western private equity firms used to large leveraged buyouts of mature companies that could be saddled with debt.
Deals in the region tend to be smaller, the companies younger and thirsty for capital, and opportunities to cash out fewer, often fraught with political and economic risks.
Carlyle said it would have no stake in Alterra, but would provide deal referrals, advice and co-investment. Alterra would also assume management of Carlyle’s Sub-Saharan Africa Fund as sub-advisors starting from July 1.
Carlyle’s deals in Africa have included a US$147 million bet on Nigeria’s Diamond Bank, which soured after a shrinking economy, a plunging currency and an oil price slump fuelled a spate of defaults.
Access Bank, another Nigerian bank, took over Diamond Bank last year.
Carlyle also bought into J&J Transport, a transport firm with mining customers and Traxys, which trades commodities and provides logistics.
In 2017, peer KKR & Co Inc disbanded its Africa deals team and sold off its controlling stake in an Ethiopian rose farm. That same year, Blackstone Group Inc. sold its stake in Black Rhino Group, an African infrastructure development firm, back to its management.