Blackstone Is Pulling Back From Africa

(Bloomberg) -- Investment firm Blackstone Group LP is scaling back its bet on Africa, almost five years after it made a commitment to spend billions of dollars alongside the continent’s richest man.

The world’s largest alternative-investment manager is in the process of selling its Africa subsidiary Black Rhino Group back to management, according to a person familiar with the deal, who asked not to be identified because the discussions are private. The unit was created in January 2012 to focus on the development and acquisitions of energy and infrastructure projects across Africa.

Blackstone, through Black Rhino and along with Africa’s wealthiest man, Aliko Dangote, had talked of investing a total of $5 billion by 2019 in sub-Saharan energy projects. Instead, Blackstone stopped funding Black Rhino a year ago, the person familiar said.

Black Rhino declined to comment on the matter and a spokesman for Dangote didn’t immediately answer a call or return an email seeking comment. The Wall Street Journal reported the development earlier Tuesday.

Black Rhino had made progress on a fuel pipeline in Ethiopia, signing a framework agreement in 2015, before the plans were shelved a couple of years later. Exxon Mobil Corp. agreed to sell the 540-megawatt Qua Iboe power plant in Nigeria to Black Rhino in 2017.

Globeleq Inc, an Africa-focused independent power producer, acquired the rights to develop and operate the gas-fired project in Nigeria from the Blackstone group in December 2017, the company said in a reply to questions. “Since then, together with Black Rhino, Globeleq has been jointly developing the project,” it said.

When the sale of the power plant is completed, Blackstone will no longer have ownership of Black Rhino, the person familiar said.

Blackstone isn’t the only major private-equity firm to struggle in Africa. KKR & Co. disbanded its Africa deal team in 2017.

The continent’s growth prospects mean other private-equity investors are still interested. The U.K.’s development finance arm, CDC Group Plc, which owns 70 percent of Globeleq, has said it may invest more than $4.5 billion into the continent over the next four years as the government looks to increase business ties with Africa after it leaves the European Union in March.

Blackstone isn’t in full retreat. It’s launching a standalone company to invest hundreds of millions of dollars in renewable power assets in the Middle East and north Africa, the Financial Times reported in October, citing unidentified people familiar with the plans.

--With assistance from Vernon Wessels.

To contact the reporters on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net;Tom Metcalf in London at tmetcalf7@bloomberg.net

To contact the editors responsible for this story: Pierre Paulden at ppaulden@bloomberg.net, Helen Robertson, James Herron

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