Ethos exits SA tyre company to Carlyle, Old Mutual

TiAuto is Carlyle’s first deal in South Africa, and its second this week from its sub-Saharan Africa fund

Ethos Private Equity has sold South African tyre retailer and wholesaler Tiger Automotive (TiAuto) to The Carlyle Group and South African private equity manager Old Mutual Private Equity.

Carlyle will invest in the company using its $698 million Carlyle Sub-Saharan Africa Fund, and Old Mutual Private Equity will invest from its fourth fund, a R4 billion (€292 million; $363 million) vehicle focused predominantly on South African businesses. The TiAuto founders will also re-invest equity in the company, and together the consortium will own 100 percent of the business.

Financial details of the transaction were not disclosed, but according to media reports the deal values TiAuto at around R1.75 billion (€128 million; $159 million), including debt. Carlyle and Ethos declined to comment on the transaction.

Ethos acquired TiAuto in 2008 with capital from Ethos Fund V, a 2005-vintage vehicle which closed on R5.5 billion (€402 million; $500 million), according to PEI’s Research and Analytics division. The firm took TiAuto private in a transaction valuing the company at around R1 billion (€73 billion; $90.8 million).

TiAuto, established in 1967, operates in the Southern Africa wheel and tyre retail and wholesale market through four divisions: Tiger Wheel & Tyre, Tyres & More, YSA and Treads Unlimited. TiAuto distributes primarily automotive tyres from global manufacturers, including Continental, Yokohama, Michelin, Pirelli and Goodyear. It also distributes alloy wheels, automotive batteries and other auto parts, and offers related fitment services.

The business currently has 104 owned and franchised stores across Southern Africa, and employs more than 1,500 people. In a statement on the firm’s website, Ethos partner Shaun Zagnoev said the firm has been receiving unsolicited offers for TiAuto “for a number of years”.

This is Carlyle’s first investment in South Africa, and its second this week from its Sub-Saharan Africa Fund. On Monday the firm announced it had made a $147 million investment in Nigerian commercial bank Diamond Bank, which is listed on the Nigerian Stock Exchange.

The Carlyle Sub-Saharan Africa Fund has so far invested around $300 million across a range of industries, including logistics, mining services, retail and financial services, and across several geographies, including Nigeria, Mozambique, Zambia, Tanzania, the Democratic Republic of the Congo and Southern Africa, according to the firm.

“We’re happy with the pace of investment, we’re happy with the opportunities we’re seeing and the pipeline continues to be strong,” Marlon Chigwende, head of the Sub-Saharan Africa Fund, said in a recent interview with PEI. “We’ve got a very targeted demographic and sectorial focus, and within that we’re looking for market leaders to help them grow and develop their businesses, and so far so good on that front.”

Look out for Private Equity International’s Emerging Markets Special, which will be published in the forthcoming December/January issue