Carlyle plans to launch a $750m fund to invest in Africa, a continent long neglected by the large international buy-out firms, people familiar with the US private equity group said.
David Rubenstein, the group’s co-founder, has a reputation for being a pioneer in raising and investing money in frontier economies.
Mr Rubenstein was among the first buy-out executives to raise money in Libya and has oil money going into Carlyle funds from resource-rich African nations such as Angola.
The soon-to-be-launched Carlyle fund would be overseen by a team of three with a presence in Johannesburg, Zimbabwe and Nigeria, these people added.
Carlyle already has a significant presence in north Africa, as well as a dedicated private equity fund for the Middle East and north Africa.
Many parts of Africa are now enjoying better prospects than at any time in recent history due largely to a rush for resources led by the Chinese.
“The majority of Americans don’t pay enough attention to Africa,” one source close to Carlyle said. “It has been China that has been the catalyst for economic activity in Africa.”
Carlyle’s fundraising machine is by far the most powerful of any of the large private equity groups. But speaking at a conference in Berlin on Tuesday, Mr Rubenstein referred to a difficult fundraising environment, a complaint echoed by executives at all of the significant private equity groups. For example, in 2007, at the height of the boom, Carlyle raised $30bn, a figure it is unlikely to come close to today.
“We have seen more investment and more exits, but fundraising lags behind,” Mr Rubenstein said. Yet, he added that he expected fundraising to improve due to low interest rates and the thirst of pension funds in particular for yield. But even when the pension funds and sovereign wealth funds increase the money they give to the buy-out firms, the fees they pay are likely to be dramatically smaller, Mr Rubenstein said.
The sovereign wealth funds in particular are becoming less passive, seeking to invest alongside the private equity groups, hold separate accounts with them or invest directly and avoid paying fees.
Today, Carlyle has numerous specialised funds and has also been growing through acquisitions, bringing its total assets under management, whether direct or indirect, to almost $150bn. These new funds and acquisitions, such as its deal to acquire Alpinvest, which invests in private equity on behalf of its own investors, comes as Carlyle is moving towards a public listing, following Blackstone and KKR, and also Apollo, which will soon list.
The Carlyle groups is one of the largest private equity firms in the world with investments in Asia, Latin America and Europe. They’ve been bullish on Africa in the past and with this investment plan, they see signs of solid economic growth.