Carlyle Africa fund to broaden remit following MD hire

The $698m sub-Saharan fund is looking at opportunities in North Africa following a market resurgence across the continent.

Carlyle Group has appointed a new managing director of its sub-Saharan Africa fund team amid plans to broaden its investment remit to include North Africa, Private Equity International has learned.

Lagos-based Idris Mohammed joins from Development Partners International, where he helped to raise two funds and led acquisitions across Africa, including in Botswana, Nigeria and Egypt. The appointment follows a “significant” increase in the deployment of the $698 million Carlyle Sub Saharan Africa Fund over the past 18 months, Eric Kump, managing director and head of CSSAF, told Private Equity International.

The 2013-vintage fund is expected to be around two-thirds deployed by the end of the year following diminished interest from competitors and improving market conditions across the continent, Kump said. Global funds appear to have retrenched from the African market in recent years due to geopolitical instability and currency fluctuations in countries such as Egypt and Nigeria, he added.

“The North African countries are increasingly investing in the sub-Saharan markets, particularly the francophone markets that are close to them,” Mohammed told PEI. “They’re also looking farther afield, highlighting the greater connectivity between sub-Saharan Africa and North Africa, and we think that that’s going to generate some interesting investment opportunities.”

CSSAF, which has commitments from Merseyside Pension Fund and African Development Bank, is targeting a 20 percent internal rate of return, industry sources told PEI. It is unclear whether this is net or gross IRR.

Private equity firms have completed 84 transactions in Africa so far this year, significantly lower than the 169 recorded in 2016, according to data from S&P Global Market Intelligence. Deal values have soared to $5.8 billion as of 5 October, more than double the $2.1 billion total for last year.

Private equity activity in North Africa has remained strong fuelled by the perception of returning stability post-Arab Spring. North Africa’s share of deal value rose to 42 percent in 2016, up from 38 percent in 2015, according to EMPEA data, with Egypt, Morocco and Tunisia accounting for more than 90 percent of deals.