Carlyle’s African Fund Closes Well above Target


April 23, 2014

Carlyle Group, who this week became the latest private equity (PE) house to announce its intentions with regards to investing in emerging markets in the near future, have had further success on this front.


The Financial Times reports that Carlyle’s first fundraiser specifically aimed at sub-Saharan Africa has smashed its target, closing 40% above the firms initial target and raising $698 million.


Although the African continent as a whole is still the baby of the PE marketplace in terms of the money it raises and the sums that are invested there, it is undeniable that the steady stream of investment that has gradually built in recent years is looking like becoming a flood in the near future.


What is Driving Interest in Africa?
For much of the last decade, investment in Africa has been about laying the foundations for a successful future. This has seen sectors such as agriculture, real estate, infrastructure and transport get much of the attention of the investors that have been focused on the region.


These foundations are now widely seen to be in place, and alongside improving education standards in Africa meaning many of the most talented individuals are now staying at home rather than heading abroad to study and then launch their career, are ready to be built upon.


Overall, this has meant that Africa’s growing middle class have been set to drive most investment, with firms looking widely at consumer goods, and at how they can develop these markets across Africa. However, discoveries of valuable natural resources, including oil and gas, in recent times, have also proven attractive.


While investors are increasingly looking at Africa, Carlyle have been the industry leaders in creating a fund committed to the region, which has undoubtedly helped it to achieve such a successful fundraising round.


Notably, Marlon Chigwende of Carlyle told the FT that 50% of the $698 million raised came from investors that hadn’t invested in Africa before. It is these investors that are going to have the biggest impact in the development of the African economy on the back of PE investments in the years to come, without question. Chigwende said, “[Investing in Africa] is much better than it has been historically.


If you look at the quality of the growth, the emerging middle class has made it a stabler and broader base…A lot of the growth if you go back 16 years started off in the extraction industry, but over the last 10 years it’s flipped – two-thirds of the growth is now consumer-driven and that’s more sustainable.”


Where Will the Money Go?
It has long been reported that East Africa is currently the big opportunity for investors on the continent, and other global firms in addition to Carlyle are now turning their attention to the region.


However, it is not just in Kenya, Tanzania, Uganda and Rwanda where opportunities abound; Nigeria announced earlier in April 2014 that its economy had grown an astonishing 89% to $509 billion, making it Africa’s biggest economy for the first time, overtaking South Africa.

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