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The Board of the African Development Bank (AfDB) approved an equity investment of USD 50 million into the Carlyle Sub Saharan Africa Fund on 22 February. This fund is the first investment vehicle that the US-based private equity firm The Carlyle Group has raised to pursue its geographical expansion into sub-Saharan Africa.
One of the top global private equity players, The Carlyle Group has been watching the increased political stability and rapid growth of countries like Ghana, Tanzania, Botswana and Benin. The firm has described these countries as attractive places to allocate capital, in addition to South Africa, Nigeria and Kenya, the Fund’s initial investment anchor countries. Carlyle is forecasting that the Carlyle Sub-Saharan African Fund’s portfolio at exit will be a mix of buyout and growth capital investments in 15 countries across the region.
The fund plans to invest a total of USD 500 million, with the potential to double this amount through co-investment with other Carlyle global funds. The Carlyle Sub-Saharan African Fund will seek to invest in large national companies seeking intra-regional market expansion and vertical integration across neighboring countries. In line with its track record in other emerging markets, it hopes to lead in the transformation of single-country companies to regional platform companies. The fund’s investment team has reviewed deals in a wide range of countries in the region including Angola, Botswana, Ghana, Côte d'Ivoire, Mauritius, Mozambique, Namibia, and Zambia.
As AfDB president Donald Kaberuka puts it; “the African Development Bank is best placed to welcome global first-time investors to Africa. As Africa’s premier financing institution, it is our role to lend market expertise, share our risk knowledge and our know-how on how to invest in Africa in an environmentally and socially responsible manner. No other development finance institution can better play the role of welcoming large investors to the continent.” In line with this statement, 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.
AfDB and Carlyle will also jointly launch the “In-the-Board-Room” programme, an audio series targeted at African business students. The programme will provide more than 1,000 African business students with access to messages on inspirational leadership, a sense of strategic command and lessons in crisis management.
“From a portfolio diversification and balance perspective,” says Tim Turner, Director, AfDB Private Sector operations, “The Carlyle Fund will balance our equity portfolio to allow additional investments in riskier market segments. In dealing with Carlyle, we have met a truly socially responsible sponsor, well aware of its ability to shape the future of its investee companies as well as the well-being of hundreds of employees, households and consumers. We believe Africa is set to welcome such investors and we hope Carlyle’s example will be followed by other global private equity firms."