VZCZCXRO9507
RR RUEHMR RUEHRN
DE RUEHLU #0695/01 1921603
ZNY CCCCC ZZH
R 111603Z JUL 07
FM AMEMBASSY LUANDA
TO RUEHC/SECSTATE WASHDC 4144
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEATRS/DEPT OF TREASURY WASHDC

C O N F I D E N T I A L SECTION 01 OF 02 LUANDA 000695 
 
SIPDIS 
 
SIPDIS 
 
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 
--------------------------------- 
¶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 
 
SIPDIS 
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 
--------------------- 
¶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 
---------------------------------------- 
¶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 
----------------------------------- 
¶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 
 
LUANDA 00000695  002 OF 002 
 
 
runs out. 
 
Comment 
------- 
¶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