StanChart Targets Africa Buyouts After $700 Million of Deals

Feb 14, 2014 10:55 am ET

(Updates with details on RisCura in fifth paragraph.)

Feb. 14 (Bloomberg) -- Standard Chartered Plc, the London- based bank present in Africa for more than 150 years, said it’s investing more money in private-equity deals on the continent than in any other region in which it operates.

Since 2008, when its African private equity team was formed, the lender has invested more than $700 million across the continent and may invest as much as $300 million in three companies this year, Peter Baird, head of the buyout unit, said in a Feb. 11 interview in Stellenbosch, near Cape Town.

Investment firms from Carlyle Group LP to Robert Diamond’s Atlas Mara Co-Nvest Ltd. are seeking to profit from a continent where many countries are growing faster than developed nations. Economic growth in sub-Saharan Africa is forecast to accelerate to 6.1 percent this year from a projected 5.6 percent in 2013, according to the International Monetary Fund. Investment will probably rise to 23.2 percent of gross domestic product, from 22.8 percent last year, according to the IMF.

While private-equity firms typically raise a set amount of capital to invest, “the funds we have on offer are limited only by the bank’s global appetite for private-equity,” Baird said. “Our maximum ticket size is realistically about $125 million per deal. The Africa business is booming for the bank.”

More than 70 percent of private equity managers surveyed by RisCura Fundamentals said African countries were more attractive investment destinations than any other emerging-market region, Rory Ord, head of the Cape Town and London-based company that provides valuation, risk and performance analysis, said in a presentation in Stellenbosch on Feb. 11.

Planning Exits

Standard Chartered’s private-equity unit has invested more than $3.9 billion since its inception more than a decade ago and focuses on Asia, Africa and the Middle East, according to its website. It invested $160 million in Africa last year.

“The $700 million investment in Africa is more money than in any other region,” Baird said.

In sub-Saharan Africa, total capital invested in 2013 reached a five-year high of $1.6 billion, a 43 percent increase from the year before, according to research by the Emerging Markets Private Equity Association.

While Standard Chartered has entered into nine deals, it has yet to exit any of its private-equity investments in Africa, Baird said.

“I am confident of one exit this year and I am hopeful for two, or there will be two exits in the first half of next year,” he said, without naming the assets being sold. “In terms of preferred exit routes, we’ll be creative and thoughtful, but like everyone else, we generally like trade buyers with cash.”

In Africa, the bank has private equity investments in companies including Nigeria’s GZ Industries Ltd., which makes aluminum cans, Union Bank of Nigeria Plc, Tanzania’s Export Trading Group, Botswanan retailer Choppies Enterprises Ltd. and South Africa’s Afrifresh Export Ltd. and Lodestone Brands Ltd.

--Editors: Dylan Griffiths, Gordon Bell