UPDATE 1-Carlyle and S.Africa's Investec take stake in Mozambique firm

Thu Jan 23, 2014 11:52am EST

JOHANNESBURG Jan 23 (Reuters) - Carlyle Group and the asset management arm of South Africa's Investec have taken stakes in a Mozambique-based transport firm, the two companies said on Thursday, the latest private equity deal to target Africa.

Private equity investments are increasingly popular in sub-Saharan African, given its high growth rates and illiquid capital markets, which make traditional equity investing more difficult.

The two companies said they had taken stakes in J&J Africa, a family-run business that ships products including fertiliser and consumer goods from Mozambique's Port of Beira to neighbouring countries Zambia, Malawi and Zimbabwe.

It employs around 1,500 and has a fleet of 800 trucks, as well as warehouses.

Carlyle and Investec did not disclose the terms of their investments, but Marlon Chigwende, the U.S. firm's Africa co-head, said it had taken a "significant minority that may well grow over time".

The deal represents a vote of confidence in Mozambique, which has had its image tarnished by intermittent political violence since last year that has rekindled concern of a return to civil war after 16-years of conflict ended two decades ago.

That has yet to deter investors keen to take advantage of improvements in its port infrastructure.

"As Beira port has scaled up its capacity to handle freight and shipping, that creates a much better route of both import and export for these countries," said Investec's William Alexander.

The deal is the second for Carlyle's sub-Saharan African fund. Along with two other investors it took a $210 million stake in Tanzania-based agribusiness Export Trading Group in 2012. Like J&J, that business is also family run.

"In our target countries - Tanzania, Zambia, Mozambique, Nigeria and Ghana - a lot the businesses that we'd be looking to invest in tend to be family run and family owned," Chigwende said.

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