Carlyle to buy tyre firm stake in maiden South Africa deal

U.S. private equity firm Carlyle Group LP has agreed to acquire a stake in South African tyre dealer Tiger Wheel & Tyre, according to a person familiar with matter, marking its first deal in Africa’s most developed economy.

Private equity firms are targeting sub-Saharan Africa to gain exposure to fast-growing economies and rising consumer spending. Until now, Carlyle has focused its nearly $700 million Africa fund elsewhere on the continent.

The investment in South Africa would mark an endorsement of Africa’s most advanced economy by foreign investors, even as it has been hampered by slowing growth and labour strife.

Carlyle, together with insurer Old Mutual Plc , will acquire the stake from South Africa’s Ethos Private Equity, said the source, who declined to be identified because the information is not yet public.

Carlyle declined to comment. No one was immediately available for comment at Old Mutual or Ethos. It was not immediately clear whether the deal had received approval from South African competition regulators.

Tiger Wheel & Tyre sells and fits replacement tyres across South Africa and has a presence in Namibia, Botswana and Mozambique. The deal values it at around 1.75 billion rand ($158 million) including debt, the source said.

On Monday, Nigeria’s Diamond Bank 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.