26 November 2012

Nigeria: U.S. Firm to Invest U.S.$210 Million in African Agric Export

A United States firm, Carlyle Group, is leading a $210 million private equity investment in the procurement and export of agricultural commodities from Africa to Asia, Europe and America.

Other minority investors include Pembani Remgro Infrastructure Fund, a South Africa-based private-equity firm and Standard Chartered Plc, Africa Private Equity division.

The $210 million would be invested into Export Trading Group, a Tanzania-based agricultural company that sources commodities from Africa's small farmers for export.

Making the announcement in Washington recently, the Managing Director of the Carlyle sub-Saharan Africa Fund, Genevieve Sangudi, disclosed that this was the first investment of its new sub-Saharan Africa Fund.

She revealed that the sub-Saharan Africa Fund, targeted at $500 million, is a reflection of how private-equity firms are trying to position themselves to tap into the continent's new consumers as well companies that are expanding on the back of demand for food and energy from the rest of the world.

"Competition among global rivals is heating up in Africa, as investment returns diminish in more developed parts of the world," she said.

Sangudi noted that Africa's prospects appear more appealing than in the past, largely because it is expanding faster than most regions outside Asia and the Middle East. The continent's young people are also making their way to the cities and stoking consumer demand.

She disclosed that the Carlyle Group is a global alternative asset manager with more than $156 billion in assets under management across 99 funds and 63 funds of funds vehicles.

Founded in 1987 in Washington, DC, she said Carlyle has grown into one of the world's largest and most successful investment firms, with more than 1,300 professionals operating in 32 offices in North America, South America, Europe, the Middle East, North Africa, sub-Saharan Africa, Japan, Asia and Australia.

The Export Trading Group, which trades 25 different commodities, from cashews to coffee, said that with the injection of $210 million fresh capital coming on the heels of $74 million earlier invested by Standard Chartered it is set to double sales.

The company revealed that it earned $884 million in revenue in the fiscal year ended March 31, and projects that figure will rise to $1.5 billion next year.

Managing Director of Export Trading Group, Ketan Patel, disclosed among other things that the Group expects to use the fresh capital from Carlyle and others to expand transport and distribution networks in Africa to get more farm-grown food onto the continental and global markets, and also acquire more warehouses in Asia, where it buys rice and fertiliser.

In its recent assessment of the continent's growth, the International Monetary Fund had estimated that sub-Saharan Africa's economy would expand by 5 per cent this year.

In a wave of recent investments into the continent, Blackstone Group, a U.S. investment firm with other partners invested $900 million in the Bujagali hydroelectric dam in Uganda, a project that helped alleviate the East African nation's chronic energy shortages.

A Nigerian, Kayode Akinola, a former banker in Europe and deal maker with Africa-focused and London-based private-equity firm Helios Investment Partners LLP, was also recently hired by KKR and co, to find investment opportunities in the region.

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