CARLYLE GROUP VISITS ANGOLA LOOKING FOR NEW MARKETS

C O N F I D E N T I A L SECTION 01 OF 02 LUANDA 000695

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E.O. 12958: DECL: 07/10/2017
TAGS: ECON EFIN EINV AO
SUBJECT: CARLYLE GROUP VISITS ANGOLA LOOKING FOR NEW MARKETS

Classified By: CDA Francisco Fernandez for reasons 1.4 (b) and (d)


1. (C) Summary. The U.S. investment company The Carlyle
Group brought its heavy hitters to Angola to meet with
President Eduardo Dos Santos and the leaders of the GRA,s
economic team and to persuade the Angolan national oil
company Sonangol, the Ministry of Finance and perhaps the
Angolan Development Bank (BDA) to invest a portion of
Angola,s petroleum revenues with Carlyle. Carlyle also
announced the launch of its new USD 5 billion Africa Fund,
which will invest in South African and Angolan projects.
Carlyle is betting that Angola,s financial elite from the
BNA, Ministry of Finance (MOF),Sonangol,s AAA Insurance
Company and other financial institutions are are looking for
ways to ensure greater financial security for themselves and
their institutions. With the GRA,s limited capacity at
spending its oil wealth and still nascent financial market
expertise, investing with well-established financial houses
would be a safe way for the GRA to park its money while it
prioritizes a future investment strategy. End Summary.

Carlyle Group Delegation in Luanda
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2. (SBU) On June 11 and 12, 2007, a high-level delegation
from the U.S.-based investment company, The Carlyle Group,
including David M. Rubenstein, its co-founder; former
Secretary of Defense Frank Carlucci, William Hasselberger of

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Washington Global Energy Investors; and David Alverson,
Carlyle,s General Manager, met with President Eduardo dos
Santos, as well as with the members of Angola,s economic
team: Deputy Prime Minister Aguinaldo Jaime, Minister of
Finance Jose Pedro Moraes and Director of the Bank of Angola
(BNA) Mauricio Amadeo. The BNA hosted the Carlyle delegation
during its visit, and news of the meetings was closely held.

Carlyle,s Africa Fund
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3. (SBU) William Hasselberger of the Carlyle Group and
Washington Global Energy Investors, LLC, briefed the
Ambassador and Emboffs on Carlyle,s plans to initiate an
Africa investment fund in the fall of 2007 with USD 1 billion
from private investors, plus an additional USD 4 billion from
banks. Through the multiplier effect, the fund would
effectively invest USD 15 to 20 billion, mostly in
international financial markets. In addition, Hasselberger
said that Carlyle,s direct participation would attract many
of the companies that have connections to Carlyle, further
raising the level of investment. Hasselberger said that
Carlyle,s Africa fund would be invested almost exclusively
in projects in South Africa and Angola, although he did not
specify where Carlyle would find suitable investment projects
in Angola,s less-developed non-extractive economy. (Note:
The GRA has only executed half of its public investment
project budget for the past two years. End note.)
Hasselberger expressed confidence that Angola,s investments
with Carlyle would insure Carlyle s investments in Angola.
He added that for each fund in which the GRA invests money,
Carlyle would accept one trainee to work in Carlyle,s
offices, who would gain hands-on experience in managing
private equity investments.

Angolan Investments in the Carlyle Group
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4. (SBU) The BNA has invested funds with the Carlyle group
for several years, according to Hasselberger. The Carlyle
group also hopes that the Ministry of Finance (MOF) and
Sonangol, the national oil company, will join in investing a
portion of their revenues in Carlyle,s private equity
ventures, said David Rubenstein. Rubenstein explained that
the Carlyle Group is seeking new markets in order to continue
growing at a rate which Rubenstein claimed has exceeded 30
percent per annum since 1987. In Africa, private equity
ventures have produced returns as high as 48 percent, he
added. Much of the investment has been directed at South
Africa. Carlyle, said Rubenstein, has designed its Africa
fund to invest in both South Africa and Angola. No fund
manager has yet been chosen for the Angolan fund.

Public Treasuries in Private Equity
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5. (SBU) Rubenstein attempted to sell Angola,s financial
managers, many of whom have private fortunes, on the growing
importance of private equity investments as a financial
instrument and as a transforming element of the economy.
Buyout funds, private equity vehicles devoted mergers and
acquisitions (M&A),fueled by investments from retirement
funds and university endowments, now account for 25 percent
of M&A in the world. Deepening pockets have permitted the
investment funds to participate in ever-larger buyouts,
including major public to private transfers. Rubenstein told
the Angolans that Carlyle had created Kuwait,s offshore fund
and wants to help the GRA to protect its wealth after its oil

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Comment
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6. (C) The Carlyle Group has chosen a good time to strengthen
its relationship with Angola, just when the GRA is looking
for the best way to protect the value of the money it cannot
use at home. As such it joins a number of large US financial
institutions trying to strike up a relationship with the GRA,
such as Citigroup and JP Morgan. Carlyle or any overseas
company provides the GRA with a discreet place to invest its
money, permitting GRA ministries to verify and track the
amounts without making the information publicly available.
At the same time provides the GRA with a relatively low-risk
investment for its growing oil wealth. Some of the wealthy
Angolans may also have been persuaded to make individual
investments with Carlyle from their own fortunes.
FERNANDEZ