The Carlyle Group has agreed to acquire a significant stake in Africa’s largest credit rating agency Global Credit Rating (GCR) from the management founders, and German development financial institution DEG.  

Following the transaction, Carlyle will be the largest shareholder, with around half the equity in the company, while management and DEG will remain invested in the business.

The transaction is expected to close in early 2017, subject to regulatory approvals.  

Funding for this investment will come from the Carlyle Sub-Saharan Africa Fund.  

Further financial details were not disclosed.

Steve Burn-Murdoch, Vice President on the Carlyle Sub-Saharan Africa team, said: “GCR is a high-quality business and well-positioned to benefit from the strong secular growth in demand for credit ratings across the continent. The business plays a critical role in deepening African capital markets and we look forward to working with management to continue to develop and broaden the company’s service offerings.”

GCR was established in 1996 as the African Arm of the New York Stock Exchange-listed Duff & Phelps. 

Very rapid growth followed and GCR has since established itself as the market leader, accounting for the majority of all ratings accorded on the African continent.

With headquarters in Johannesburg, South Africa and operations across the whole of the continent, GCR serves 400 customers across 20 countries and is the only rating agency to have a strong presence in multiple geographies across the continent.

Serving four key sectors – insurance, financial institutions, corporate & public sector entities, and structured finance, GCR provides a range of analysis and rating services to its customers, which include many household names and blue-chip organisations.

In support of GCR’s objective to establish itself as “a leading international emerging markets focussed rating agency”,  DEG acquired a significant stake in the business in December 2007, and further increased its shareholding in both 2012 and 2014. 

DCP King, Chairman of GCR, said: “We are excited to partner with Carlyle as we look to build on our strong local knowledge and focus on analytical excellence to continue to serve clients across Africa.  Carlyle brings a wealth of experience and knowledge, which will be instrumental in helping us to achieve our objectives for the business.  We believe the combination of management, Carlyle and DEG in GCR’s shareholder base positions the company well for the next phase of growth.”

Eric Kump, Co-Head of the Carlyle Sub-Saharan Africa team, added: “We are excited to invest in GCR and work alongside CEO Marc Joffe and a top-class management team and staff.  Over the past 20 years, the management team have worked hard to grow the business into the highly-respected and pan-African organisation it is today.”

“We will work with management to continue the impressive growth they have achieved in recent years. We are delighted to be able to bring our strong African experience, while also leveraging our global expertise in this sector, through our investment in DBRS, an international credit ratings agency headquartered in Toronto, Canada, to assist with further geographic expansion,” he said.