Carlyle Made Its First Investment in South Africa
Carlyle, one of the world’s largest private equity groups, has made its first investment in South Africa just days after announcing a new deal in Nigeria.
The buyout house has acquired TiAuto, a vehicle tyre and parts retailer in Johannesburg, widening its footprint in Africa. The deal illustrates an increasing appetite among private equity groups for investments on the continent.
Carlyle is buying TiAuto in a consortium with Old Mutual Private Equity from Ethos Private Equity, a South African investor. The sum was not disclosed, but the deal – Carlyle’s fourth in Africa this year – is believed to be valued at about R2bn ($182m).
Ethos acquired TiAuto in 2008, delisting the business from the Johannesburg Stock Exchange in a deal valued at R1bn.
Africa has witnessed a flurry of mergers and acquisitions, with multibillion-dollar deals announced in Nigeria and South Africa involving telecoms groups, private equity houses and consumer goods companies.
Carlyle said it was spending nearly $150m on an 18 per cent stake in Diamond Bank, a Nigerian lender. Steinhoff International, South Africa’s biggest furniture company, announced it planned a $5.7bn takeover of Pepkor, another retailer, in what would be one of the continent’s largest-ever deals.
South Africa has by far Africa’s most developed corporate sector and an established private equity industry.
TiAuto is best known for its Tyre & Wheel outlets that operate across South Africa, with branches in neighboring Mozambique, Botswana and Namibia.
“This deal we have announced is a retail-focused business, which is exactly where we are looking to position the fund, taking advantage of the emerging middle class across.
Chigwende said Carlyle had a “very strong” pipeline of deals in place. “If you have got the right businesses that are focused in the right areas and sectors, and have attractive pricing, then you can find opportunities,” he said.
“Our fund is consumer-focused – everything the consumer touches. That could be financial services, it could be logistics, and it could be retail directly.”
Africa still has to attract only a bigger proportion of the world’s private equity fund flows, but it has been drawing investor interest in recent years in its fast-growing economies and expanding middle class.
South Africa’s Ultra High Net Worth (UHNW) population has grown over the past year, and now accounts for almost 20% of the country’s total wealth.
According to the 2014 Wealth-X Ultra Wealth Report, South Africa is the 33rd richest country in terms of the population worth more than US$30 million – the highest ranking African country.
South Africa is home to 835 UHNW individuals – up 7.7% from 775 individuals in 2013 – worth US$112 billion.
This represents 17.8% of South Africa’s total wealth, which the research group lists at US$630 billion.
“One of the reasons why South Africa has long been Africa’s wealthiest economy is its relatively developed financial infrastructure.
In fact, the financial sector accounts for almost a quarter of South Africa’s GDP, and over 30% of the country’s UHNW population have derived their fortunes from this sector.”
In the UHNW population break-down, the group noted that 77% of SA’s super wealthy are self-made, with only 6% claiming their fortunes from inheritance. 17% of the UHNW group gained wealth from both inheritance and their own ventures.
This self-made wealth helped most of the country’s wealthy avoid significant impact from high inflation, government debt and the end of American financial stimulus, which negatively impacted the country’s economy, Wealth-X noted.
“In fact, for some UHNW individuals, the decrease in the value of the South African rand helped boost revenue, as exports became more competitive.”
Growth of South Africa’s Ultra High Net Worth Population
