Carlyle spinout Alterra, Ethos Capital get an exit in $300-mn logistics deal

 Carlyle spinout Alterra, Ethos Capital get an exit in $300-mn logistics deal

Alterra Capital Partners, an Africa-focused private equity firm spun out of US-based buyout giant Carlyle, and Ethos Capital are set to strike an exit from a logistics company.

South Africa’s Imperial Logistics has inked an agreement to buy Beira, Mozambique-based logistics company J&J Group at an enterprise value of $300 million (ZAR4.4 billion). This comes a week after Imperial said it was in talks for the proposed deal.

Imperial will buy Lift Logistics, the holding company of J&J Group and Greendoor Group Proprietary Ltd, which houses the South African operations of the J&J Group.

The deal includes an upfront consideration of around $67 million to buy a 51% stake in Lift Logistics and Greendoor. The remaining amount will be paid in tranches based on operating profit in the second and third year with the base case amount pegged to 5.5 times the target group’s earnings before interest, tax, depreciation and amortization.

J&J Group provides cross-border trucking services. It also offers integrated transport logistics services ranging from initial vessel logistics to warehousing and short-haul in-country transport. It is present across Mozambique, Zimbabwe, Zambia, South Africa, Malawi and Democratic Republic of the Congo.

The business being acquired had EBITDA and net profit of $49.2 million (ZAR728.6 million) and $13.1 million (ZAR 193.6 million), respectively, for the year ended December 31, 2020.

In 2014, the Carlyle Sub-Saharan African Fund and Investec Asset Management, a global investment manager with African roots, had invested in J&J Africa, a pan-African logistics company founded in 1995 that transports general cargo along the Beira corridor.

This was the second investment by Carlyle’s Sub-Saharan Africa Fund. This $700 million fund is now managed by Alterra, which was spun out of Carlyle last year.

Investec Asset Management changed its name to Ninety One last year. Subsequently, in December Ethos took an advisory contract for Ninety One’s Africa private equity funds. Ethos now manages two PE funds previously handled by Ninety One.

Some of the J&J group companies had raised additional capital from alternative investment funds. In particular, one of the affiliates had raised debt funding from Investec’s Ninety One Africa Credit Opportunities Fund three years ago.

Both Alterra and Ethos will exit as part of the strategic sale of J&J Group to Imperial.

“This positions Imperial for quicker go-to-market outside of South Africa and will provide the Group with end-to-end access to certain key countries and corridors (port to customer) in Africa,” Imperial said.

It added that J&J Group’s strategic asset base will complement Imperial’s asset-right focus.

Imperial also said that DP World, which is separately in the process of acquiring the South African company, has given its nod to the transaction.

Dubai-based port operator DP World had earlier this month inked a preliminary agreement to buy the Johannesburg-listed company for as much as ZAR12.73 billion ($882 million).

The deal comes soon after Imperial signed an agreement to sell its South American shipping business to Hidrovias do Brasil SA at an enterprise value of $90 million. Imperial had expanded in 2014 through the South America shipping business in the Hidrovia-Paranha-Paraguay waterways and with access to the largest seaports in the region.

Imperial has been trying to refocus its business around Africa and decided to exit the international operations. It had sold its European shipping business last July as part of the strategy.

Vivek Sinha

The Capital Quest