Carlyle and Blackstone partner with Dangote

Both firms are teaming up with the African conglomerate to target Sub-Saharan energy deals

The Carlyle Group and The Blackstone Group have both formed strategic partnerships with Dangote Industries, an African business conglomerate, in a push to target energy-focused deals in sub-Saharan Africa.

Dangote will co-invest alongside Carlyle’s International Energy Partners fund and Carlyle’s Sub Saharan African fund. Carlyle’s International Energy Partners, which came to market in May 2013, aims to raise more than $1 billion for energy investments outside the US, according to a source familiar with the matter.

Carlyle and Dangote will invest across the oil and gas value chain, including exploration and production, refining and gas commercialisation, focusing on projects that improve local energy capacity, create jobs and contribute to a sustainable energy future in Africa, Carlyle said in a statement.

Carlyle’s International Energy team focuses on oil and gas exploration and production, midstream, oil field services and refining and marketing in Europe, Africa, Latin America and Asia. The fund has so far made two investments: Discover Exploration and Varo Energy.

Carlyle and Dangote will also co-invest in the consumer, financial services and agribusiness companies – for which Carlyle will use its sub-Saharan fund, a $698 million vehicle that closed in April. It is understood that Dangote is an investor in this fund.

The sub-Saharan fund has so far invested in ETG, a pan-African agricultural supply chain company, J&J, a southern African logistics company, and Traxys, a global metals trader with significant sourcing in Africa.

Separately, Blackstone and Dangote have agreed to jointly invest up to $5 billion over the next five years in Sub-Saharan African energy infrastructure, with a particular focus on power, transmission and pipeline projects, Blackstone said in a statement.

Blackstone will make the investments through Black Rhino, a business it backed in July which develops and invests in projects in the power generation and fuel transportation sectors. Black Rhino’s management team has been involved in the development of more than $35 billion of infrastructure, communication and power generation projects across the globe.

Energy scarcity is the main reason why both Blackstone and Carlyle see investment opportunities in sub-Saharan Africa. The region has both the lowest urban and rural electrification rates of any continent. Sub-Saharan Africa is home to 589 million people who do not have access to electricity, approximately 70 percent of the total population, Blackstone said.

The firm has invested approximately $7 billion globally across a broad range of sectors within the energy industry.