Carlyle makes maiden investment in Nigeria Carlyle Group, one of the world's largest private equity houses, has made its first investment in Nigeria, spending nearly $150m to take a 18 per cent stake in Diamond Bank, a big lender in Africa's largest economy. The buyout group will pay for the purchase out of its dedicated sub-Saharan Africa fund, which it closed this year at $700m - nearly 40 per cent above its target. Africa attracts a tiny proportion of the world's private equity money, but interest has grown dramatically in the continent of 1bn people over the past five years, buoyed by the emergence of a new consumer class and historically high commodity prices. In spite of the recent drop in oil prices, foreign investors are still betting on Africa through a long-term perspective of the region, executives said. KKR this year announced its first investment in the region, spending $200m to buy a flower company based in Ethiopia, while Blackstone entered a partnership with Aliko Dangote, Africa's richest man, to invest across the region. Africa has also started to attract state-owned funds, including Investment Corporation of Dubai, Temasek of Singapore and China Investment Corporation. Genevieve Sangudi, head of west Africa at Carlyle, said the buyout group had a "strong pipeline" of potential deals in the continent and said it was particularly bullish about the long-term potential of Nigeria. The trajectory and the outlook over the long-term remain positive. In spite of the challenges [of low oil prices and insecurity], it is going to grow north of 6 per cent this year - and this is very positive," she told the Financial Times. Nigeria overtook South Africa this year as the continent's largest economy after the government performed a statistical review of the country's gross domestic product, which now stands at more than $500bn - making it the 26th top economy in the world. The rebasing of the size of the country's economy has increased its attraction to foreign investors, with strong merger and acquisitions activity this year, bankers say. On Monday, New York-listed American Towers Corp said it would pay roughly $1.1bn to Bharti Airtel of India for the mobile phone company's telecom masts in the country. Bharti said that it would lease back the towers for a decade. Carlyle said it was particularly bullish on the Nigerian financial industry, which it considers "under valued." The share price of most Nigerian banks has dropped between 15 and 25 per cent since January amid a broader sell-off in Lagos. The banks have suffered in part because of new regulation that has forced some of them to raise extra capital through hard currency bonds and right issues. Carlyle bought into Diamond Bank through a larger $300m rights issue. Uzoma Dozie, chief executive at Diamond, said that the bank would use the money to increase domestic lending. Although the bank could participate in the consolidation of the west African financial sector, he said that Diamond was so far concentrated on an organic growth strategy in and around Nigeria.