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U.S. buyout firm Carlyle enters South Africa with tyre deal

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(Credit: Gulf Business) Image shows a signage of the Carlyle Group LP.Carlyle Group LP
November 26
10:27 AM 2014

Carlyle Group (CG.O) has agreed to buy South African tyre retailer Tiger Automotive from Ethos Private Equity, Ethos said on Wednesday, the U.S. buyout firm's first deal in Africa's most developed economy.

Carlyle - like other private investors - has been targeting rapid economic growth and growing consumer spending in sub-Saharan Africa. Until now, the firm has focused its $700 million fund elsewhere on the continent.

The investment in South Africa marks an endorsement of its economy by foreign investors, even as it has been hampered by slowing growth and labour strife.

Carlyle, together with the private equity arm of insurer Old Mutual (OML.L), will acquire the company for an undisclosed sum, Ethos said in a statement. The deal is still subject to approval from South African competition regulators

Reuters reported on Tuesday that Carlyle and Old Mutual had agreed to buy the retailer, citing a source familiar with the matter. The company is worth about 1.75 billion rand ($160 million), including debt, the source said.

Ethos took Tiger Automotive private in a 2008 buyout worth around 1 billion rand. Tiger Automotive has more than 100 stores, with the bulk of those operating under the Tiger Wheel & Tyre brand.

It sells and fits replacement tyres across South Africa and also has a presence in Namibia, Botswana and Mozambique.

On Monday, Nigeria's Diamond Bank (DIAMONB.LG) said Carlyle had invested $147 million in it. Carlyle has already invested in Tanzania-based supply chain manager Export Trading Group and Mozambique-based transport firm J&J Africa.

Following the close of the deal, Carlyle, Old Mutual and Tiger Automotive's senior management will own 100 percent of the company, Ethos said, without giving a more detailed breakdown.

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