Carlyle founders and billionaire Dangote back new private equity fund in Africa

by MMC
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(Bloomberg) — A team from Carlyle Group Inc. said it has won support from the U.S. private equity firm’s founders as well as Nigerian billionaire Aliko Dangote for a new fund focused on Africa.

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Carlyle co-founders David Rubenstein and Bill Conway are among the investors in the Alterra Capital Partners fund, said partner Genevieve Sangudi. The PE company plans to raise up to $500 million in the coming months and raised $140 million in its first close, she said.

As big investors including Carlyle, Blackstone Inc. and KKR & Co. have pulled out of Africa, smaller companies see opportunities as startups surge to fill gaps in a continent lacking infrastructure financial and logistical. Alterra plans to invest in the telecommunications, technology, logistics, healthcare, consumer and retail sectors, Sangudi said.

“Now is a great time to invest money in Africa, as many current macroeconomic themes offer attractive potential investment opportunities,” Sangudi said in an interview. “For example, Africa’s energy challenges provide opportunities to invest in private distributed energy solutions, while technology continues to drive Africa’s digital transformation at a rapid pace. »

Other investors in Alterra’s fund include Standard Bank Group Ltd., International Finance Corp., Norfund AS, Germany’s Deutsche Investitions- und Entwicklungsgesellschaft GmbH and Allianz SE’s AfricaGrow fund, Sangudi said.

In mid-2020, at the height of the Covid-19 crisis, Washington-based Carlyle sold its $700 million sub-Saharan Africa fund to its local investment team. The new company, called Alterra, took over management of Carlyle’s assets.

Alterra, which also includes two other founding partners — Eric Kump and Bruce Steen — exited six companies and managed to return about $600 million to investors, Sangudi said. The team has invested approximately $1 billion in 23 companies in Africa.

Recent sales include logistics company J&J Group to DP World Ltd., oil and gas company Assala Energy Holdings Ltd. to Maurel & Prom SA, the agro-technological company Tessara Ltd. to Agrofresh Solutions Inc. and Global Credit Rating Co. to Moody’s Corp.

Alterra has a team of 17, including two partners – Paul Maasdorp and Bryce Fort – from Africa-focused private equity group Emerging Capital Partners LLC.

The company will face competition from other Africa-focused firms such as Helios Investment Partners LLP and Adenia Partners Ltd., which have doubled their presence on the continent, adapting their operating models and building local capabilities.

Last year, companies raised about $7.6 billion for African investments, according to the Africa Private Capital Association. Around 82 exits were recorded, the association said.

More from the interview:

  • The biggest challenges for private equity investors remain foreign exchange risk and illiquid and cramped domestic capital markets which in many cases contribute to the cost of doing business, Sangudi said.

  • “The new fund will target hard currency denominated and linked investments that provide a hedge against currency depreciation on the continent. »

  • Alterra will seek to build a portfolio in which at least 50% of its investments are in companies that generate the majority of their revenue in U.S. dollars, Sangudi said.

–With help from Rob Dawson.

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