Media & News

SAVCA Newsletter Feature: Q&A with The Carlyle Group

Erik Kump

Erik Kump

The Carlyle Group this week announced that it had acquired a majority share in Amrod, a supplier of promotional products and clothing, which serves distributors in South Africa and neighbouring countries. SAVCA speaks to Eric Kump (EK), co-Head of the Carlyle Sub-Saharan Fund.
What was the rationale behind the Amrod acquisition? 

EK: Amrod is a leading Southern African promotional products importer and supplier. Promotional goods are items branded with the end customer’s own brand or logo and almost any product can be branded – clothing, writing instruments, stationary, technology items, bags, etc.  

The three founders, Amit Brill, Nimrod Barlev and Craig Friedman have built a great team which exhibits a rare combination of innovation, operational excellence and customer focus. The company expects to further improve their customer service and lead times when they move into their new purpose built 39000m square warehouse/branding facility in January 2017. 

The company also has ambitions to expand into West and East Africa over the next few years. Carlyle can support the company by using our global and African network to expand into new regions. We intend supporting the team as they consider entering adjacent product markets and making acquisitions.
What exciting deals and transactions in Africa have you been involved in in the past few years?

EK: Since its inception in 2012, the Carlyle Sub-Saharan Africa Fund has invested over $300 million to date across a variety of industries, including logistics, agribusiness, mining services, retail and financial services, and across a variety of geographies, including Nigeria, Mozambique, Zambia, Tanzania and South Africa. Our investments have included Ti-Auto in South Africa, ETG in Tanzania and J&J Transport in Mozambique.
What opportunities does The Carlyle Group see in sub-Saharan Africa? 

EK: We are seeing some of the best deal flow we have seen in years across the region. After a decade of robust growth and increased foreign direct investment, there has been a slow down over the last 18 months, particularly in South Africa and Nigeria.

Most major currencies have also weakened and performance of capital markets across the continent has been sluggish over this period. As a result, we are beginning to see an investment climate characterised by a reduction in competition, with less hot money actively pursuing deals and more motivated sellers, and thus the opportunity for more proprietary transactions at reasonable valuations. This makes the investment climate in sub-Saharan Africa quite attractive for us.
Our thesis remains that there are many well managed, fast growing and profitable companies in sub-Saharan Africa and that over the medium term, the region’s rising GDP and favourable demographics will continue to drive growth ahead of that in developed markets. We are seeing deal flow in a variety of sectors including ICT, business services, consumer and retail and agri-business. 

In Southern Africa, we have seen economic uncertainty create opportunities to invest in high-quality companies that have not been present in the preceding few years. In Nigeria, now that the country has taken the tough medicine and allowed a partly freely floating currency, the country is once again an attractive investment destination with many well-run companies with scale needing new investment or an exit for one or more shareholders. East Africa remains attractive and we are currently evaluating several opportunities across Kenya, Tanzania and Uganda.