UK's CDC Joins Citigroup in $200 Million Africa Venture

Posted 15 January 2007 @ 05:03 pm EET     Print     Reprint     E-Mail     Comments

JOHANNESBURG (Reuters) - CDC Group, a private equity investor owned by the British government, has teamed up with U.S. banking giant Citigroup to invest at least $200 million in Africa, the groups said on Monday.

CDC would invest $100 million in Citigroup's first dedicated African private equity fund, CVCI Africa Fund, with the U.S. bank matching that amount, CDC and Citigroup said in a joint statement. The fund will be managed by Citigroup Venture Capital International (CVCI), a unit of Citigroup Alternative Investments.

"CVCI is excited by this opportunity to pursue investments in Africa. We believe that Africa is a high potential market where we can generate attractive returns," said CVCI head Dipak Rastogi.
CDC, whose latest investment brings its total commitments to Africa to over $830 million, said there were investment opportunities for the fund in infrastructure, natural resources, energy, telecoms and general manufacturing.

"We believe that profitable investments in such areas are fundamental to creating wealth and alleviating poverty in growing economies," CDC Chief Executive Officer Richard Laing said.

AFRICA'S GDP RISING

CVCI said Africa boasted rising GDP growth rates and large markets in nine big countries with a combined GDP of $600 billion and a population of 400 million. The amounts invested by the fund and other CVCI managed funds in individual deals are expected to range between $20 million to $60 million and will be invested in firms in Sub-Saharan Africa and North Africa.

CDC said its backing of the Citigroup fund will benefit the private equity industry in Africa.
A surge in private equity activity in South Africa last year and substantial profits for the backers of pan-African mobile phone operator Celtel, which was sold to Kuwait's MTC (TELE.KW) in 2005 for $3.4 billion, have drawn the interest of foreign investors in the industry.

South Africa's Edgars Consolidated Stores Ltd. (Edcon) (ECOJ.J) is in talks about a $3 billion acquisition by private equity firms Bain Capital, Blackstone Group (BG.UL) and Kohlberg Kravis Roberts & Co (KKR.UL), the Wall Street Journal said last month.

Retailer Shoprite (SHPJ.J) also said last month that South Africa's Securities Regulation Panel (SRP) would decide on February 23 whether a $1.8 billion proposed private equity buyout South Africa's biggest private equity deal yet can go ahead.

South Africa's private equity industry the biggest on the continent had 43.9 billion rand ($6.09 billion) in funds under management at the end of 2005, according to a KPMG survey released in May. But in 2006, South African private equity firms such as Ethos Private Equity and Brait Private Equity, a unit of investment bank Brait (BATJ.J), have raised substantially more funds than in previous years, mirroring similar trends in Europe and the United States.