The Carlyle Group has shelved a second Middle East and North Africa private equity fund, halting a seven-year strategy within the region just months after closing a Sub-Saharan fund and forming another Sub-Saharan equity partnership with Dubai’s Abraaj Group and Edmond de Rothschild.
The world’s second largest private equity group made the decision in reponse to declining appetite from institutional investors in the US in the wake of the Arab spring and rising geo-political risks.
“When we initially raised our MENA fund, we were focused on investing significant amounts of capital in a broad group of countries including North Africa,” a spokesperson told ft.com, adding that focus will now shift towards “targeted opportunities” in the region.
At a time of decreasing financial yields within the GCC as a result of increasing competition between local and international investment funds and financial institutions, Sub-Saharan countries have become an attractive prospect by comparison for both Gulf-based and foreign parties.
Carlyle’s first $500m private equity fund for the MENA region was raised in 2007 and was generating a 35% cumulative gain as of September, but ran out of money earlier this year.
In contrast, the Carlyle Group has dramatically expanded its interests in Sub-Saharan Africa over the past six months, closing off its ‘Carlyle Sub-Saharan Africa Fund’ (CSSAF) at $698m in April – exceeding its own expectations by raising $200m over its initial target of $500m.
With funds from Aliko Dangote and African Development Bank – the latter contributing $50m – CSSAF has already invested $210m in the Tanzanian supply chain manager Export Trading Group, $100m in the Mozambican a shipping firm J&J Africa and a sum in African metals interest Traxys.
“The success of the fundraising reflects investors’ appetite for the strong economic growth that the region has experienced, as well as the prospects for future economic development across the continent,” noted Marlon Chigwende, MD and co-head of Carlyle’s Sub-Saharan advisory.
Launched in 2011, CSSAF is the largest first-time private equity fund in Sub-Saharan Africa, and will be investing across the continent, but with particular focus on South Africa, Nigeria, Kenya, Tanzania, Ghana, Mozambique, Botswana, Zambia and Uganda.
Carlyle’s joint fund with Dubai’s Abraaj Group and Edmond de Rothschild, announced this July, expects to raise a further $530m, managed by Amethis Finance, an asset manager also part owned by the Edmond de Rothschild Group and operating out of Nairobi and Abidjan.