7 February 2017

Carlyle buys 75% stake in CMC Networks

Nasdaq-listed The Carlyle Group has acquired a 75% stake in privately owned local telecoms group CMC Networks in a deal valued at $100m.

The deal will further diversify Carlyle investments in sub-Saharan Africa. Carlyle is a private equity group with $170bn assets under management.

Founded 28 years ago by Grant Walker, CMC provides telecommunications network products such as ethernet, which connects multiple devices to the local area network for file sharing and internet access. CMC uses fibre optic cable network and satellite to help its corporate clients access internet data and make voice calls over the internet.

“The partnership with Carlyle will open expansion doors for us as we look beyond organic growth,” said Walker, who retains 25% of CMC.

CMC is eyeing expansions in countries such as Pakistan and Kazakhstan.

“Having [financial] resources will help us expand quickly into new markets and help us introduce new products to clients to stay competitive,” said Walker.

CMC said it was experiencing high traffic internet data volumes, both into and out of Africa. It has more than 100 points of presence, which is a location that companies use to connect to the internet.

CMC’s research has shown that Africa’s demand for high-quality bandwidth is growing by about 30% per annum.

The company has more than 50 global telecommunications providers who use its platform to provide data and internet connections to their clients in Africa and the Middle East.

Martin Springer, MD of CMC, said the company had quadrupled its revenue in the past five years. CMC manages high quality data and internet connections to more than 400 enterprises, including over half the Fortune 500 companies.

“We have an extensive geographic footprint, enabling us to serve multigeography and multisite customers. We believe this investment from Carlyle is opportune as it allows us to rapidly pursue new markets, products and avenues for growth,” he said.

CMC has 170 employees and will add more as it expands further. Carlyle sub-Saharan Africa Fund director Braam Verster said the fast-growing data demand in Africa and the Middle East offered “tremendous growth opportunities for CMC, and we look forward to using our sector expertise and global network to help them achieve their goals”.

Equity for the transaction came from the Carlyle sub-Saharan Africa Fund.

It is the seventh investment by Carlyle’s dedicated sub-Saharan Africa fund. Source: Business Day Live