StanChart targets African buyouts

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StandardChartered REUTERS A woman walks past a Standard Chartered bank in London.

Johannesburg - 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 the 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 (R21 billion) in three companies this year, Peter Baird, head of the buyout unit, said in a February 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 an expected 5.6 percent in 2013, according to the International Monetary Fund.

Investment is expected to 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.”

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,” he said.

Nine Deals

While the bank 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. - Bloomberg News


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