Alterra Capital Partners has crafted a unique strategy for optimising Africa’s opportunities since its spin-out from Carlyle. Genevieve Sangudi [pictured], Partner at Alterra, who co-founded the firm with Partners Eric Kump and Bruce Steen, discusses its strategy and also showcases its investments in agriculture, technology and gas infrastructure. The team, under the Carlyle platform, has been a previous winner of a number of Private Equity Africa Awards.
In September 2023, Alterra Capital Partners achieved a $140 million first close on the Alterra Africa Accelerator (AAA) Fund, a pan-African growth equity vehicle targeting between $400 and $500 million in commitments. The AAA Fund has received backing from numerous institutions across Africa, the United States, and Europe.
Alterra is one of the most experienced private equity fund managers dedicated to investing in Africa. The firm was set up in 2020 when Carlyle’s sub-Saharan Africa team spun out into an independent platform. In 2021, Alterra bolstered the senior team with three experienced partners from the Emerging Capital Partners’ (ECP) anglophone team – Bryce Fort, Paul Maasdorp, and Renschke Volschenk.
The partners collectively have over 100 years of African private equity experience and have led over $2 billion of direct private equity investments and co-investments into about 20 companies across Africa. They are supported by a strong and diverse team of investment professionals operating out of offices in South Africa, Kenya, and Mauritius.
Through the AAA Fund, Alterra will invest $30 to $60 million in businesses across the continent, with a focus on southern and eastern Africa. We primarily target companies that have positive earnings before interest, taxes, depreciation, and amortisation (EBITDA).
Alterra will focus on businesses that are operating in industries, capitalising on the rapidly growing domestic consumer and business demand. We have a leaning towards logistics, consumer, healthcare, financial services, and technology spaces – including the information and communications sub-sectors. Once invested in a company, Alterra leverages its on-the-ground presence and pan-African networks to enact value-creation initiatives in partnership with founders and management.
The case for gas logistics
One of the deals in our portfolio is Gas Logistics, a world-class integrated liquefied petroleum gas (LPG) infrastructure and distribution business in East Africa. Our team has made significant capital expenditure investments early in the holding period to address infrastructure bottlenecks at the Port of Mombasa in Kenya.
In addition to unlocking significant growth in LPG consumption in the region, substituting out charcoal, and thereby decreasing deforestation and pollution levels, these investments also played a role in driving employment.
Nearly 500 young people from neighbouring communities received welding and scaffolding training through a unique public-private partnership. A good number of the trainees secured paid internships and eventually full-time jobs with Gas Logistics, its contractors, or elsewhere in Kenya and outside the country.
Successfully exiting agri-tech
Another notable deal in our portfolio is Tessara, a leading South African manufacturer of preservation technologies for use in the export of fresh produce, including grapes, berries, and flowers. We first backed the company in 2018.
Following our initial investment, Tessara leveraged its proprietary technology to expand into new markets and offer solutions for additional agricultural products. The company also launched a recyclable product that reduces single-use plastic waste and meets customer demand for more environmentally friendly products.
These initiatives translated into a more sustainable value chain for fresh produce, reducing reliance on harmful fungicides and extending shelf life without refrigeration. Our investment further benefited the communities in which the company operates, as the doubling of production capacity resulted in headcount increasing by 44%.
In July 2023, Alterra announced that AgroFresh, a leading US-based AgriTech firm, would acquire Tessara. By this point, Tessara’s products had protected more than $3 billion worth of fresh produce annually in more than 30 countries. AgroFresh’s reach will further magnify the positive impact of Tessara’s technology, minimising food waste and chemical usage for more customers.
Forging forward
The Alterra Team has consistently leveraged technology to transform business models and drive scale. Early in the sourcing process of a prospective deal, the team will identify opportunities to use technology to drive operational efficiency, improve customer experience, expedite expansion, and reduce costs.
In addition to driving technological change, the Alterra team prioritises sustainability throughout the investment cycle. The Alterra team believes that investee companies that strive to understand, prepare for, and mitigate environmental, social, and governance (ESG) risks are more resilient, more innovative, and more competitive.
Our team will proactively work with companies to develop and deliver ESG initiatives, realise opportunities for impact according to our impact metrics, align executive compensation to these objectives, and implement comprehensive ESG and impact monitoring and reporting.
Despite the broader slowdown in exits for African private equity in recent times, Alterra’s investment and value creation strategies have resulted in significant buyer interest in its assets, particularly from global strategic players.
In total, our team has announced the signing of the sale of nine exits from the legacy Carlyle and ECP funds over 2022 and 2023. The Alterra team is looking forward to building off the fundraising and exit momentum moving forward.
