Carlyle Group share price down, makes first investment in South Africa

Carlyle Group LP, one of the world’s largest private equity groups, has agreed to buy South Africas Tiger Automotive, marking its first investment in the country.

The US buyout firm purchased TiAuto, a vehicle parts and tire retailer in Johannesburg, in a consortium with Old Mutuals South African private equity unit from Ethos Private Equity. The value of the deal was not disclosed, but it is estimated to be around $182 million. The agreement still needs to be approved by the South African competition regulators.

This is Carlyles fourth deal in Africa, which outlines the increased interest from private equity groups in the region, despite slowing growth, labor conflicts and falling commodities prices.

“On conclusion of the transaction, the acquiring consortium will hold 100 percent of TiAuto’s share capital” Ethos said in statement “TiAuto’s current senior management team will form part of this shareholding.”

Ethos purchased TiAuto back in 2008 and took it down from the Johannesburg Stock Exchange, turning it private. The company has more that 100 stores, including 18 functioning under the year-old Tyres & More brand, while the rest have the Tiger Wheel & Tyres logo on them. TiAuto delivers across South Africa but also has branches in Namibia, Botswana and Mozambique.

“Carlyle and Old Mutual private equity represent a wealth of expertise, which will dovetail perfectly with management’s future vision and growth ambitions for the group” said TiAutos CEO Alex Taplin “Private equity ownership has been a positive experience for TiAuto. This is why management has been so supportive of partnering with private equity shareholders again.”

During this week the continent saw a series of multibillion-dollar agreements in Nigeria and South Africa, including mergers and acquisitions between private equity houses, consumer good companies and telecom groups.

On Monday, Carlyle spent $147 million from its 700 million sub-Saharan fund to acquire 18% stake in Nigerias Diamond Bank, one of the largest African creditors. Other Carlyles investments in the continent include Tanzania Export Trading Group and Mozambiques transport company J&J Africa.

“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 sub-Saharan Africa and certainly in South Africa” said Marlon Chigwende, head of the sub-Saharan Fund.

Old Mutual Plc slid 0.65% on Tuesday and an additional 0.05% on Wednesday and closed at GBX 199.70 in London.

Carlyle Group LP lost 0.78% on Tuesday and closed at $29.23 on the NASDAQ. On Wednesday the stock lost 0.44% to trade at $29.10 at 15:47 GMT, marking a one-year decrease of 11.33%. The group is valued at $9.30 billion. According to the Financial Times, the 10 analysts offering 12-month price targets for Carlyle have a median target of $36.00, with a high estimate of $42.00 and a low estimate of $30.50. The median estimate represents a 23.16% increase from the last close price of $29.23.