Global private equity firm, Carlyle announced that it was investing some $40 million in Nigerian travel agency, Wakanow. Sources say that Carlyle is buying from Africa Capital Alliance (ACA) who had invested some $20 million in the travel agency in 2015. A source familiar with the matter said, “The deal is not bad for ACA as it allows them an exit from Wakanow.”
Wakanow.com, one of West Africa’s largest online travel agencies requires significant capital in order to achieve its strategic growth plans. The African travel platform will benefit from the investment of $40 million by Carlyle Group, a global alternative asset manager.
Idris Mohammed, Managing Director, The Carlyle Group, said, “Wakanow has experienced incredible growth since inception, disrupting the travel market and taking market share both online and offline. We believe that this strong growth trajectory will continue as Wakanow benefits from an expanding middle class across the continent in addition to increasing internet penetration and mobile connectivity, which is driving increased online traffic.
We look forward to working with Wakanow’s management team to help them deliver on their vision for growth and expansion.”
The online travel agency, which was founded in 2009, also had the support of some Nigerian banks with trading facilities during its high growth expansion.
During the economic recession of 2016, which resulted in the devaluation of the naira, high airfares, the exit of many airlines among other challenges, many online travel agencies went out of business.
While, Wakanow was not one of them, the company was certainly also negatively impacted, and as a result, could not settle its borrowings on schedule.
“With the banks declining to extend further facilities to the travel agency, Wakanow chose to look for alternative investors in order to raise funds to offset the loans and stay in business,” Alimi Olakunle, an online travel agent, said.
This route to financing makes sense if one considers that this time last year, International Air Transport Association (IATA), its trading partner, threatened to cut off Wakanow from its services due to failure of the online travel agency to meet its payment obligations to IATA under the Billing and Settlement Plan (BSP) used by the industry to settle ticket sales and remittances.
The Carlyle Group investment ensures that Wakanow will benefit from Carlyle’s global expertise in the online travel sector (where it has invested in companies such as C-trip, one of the major online travel agencies operating across China, the Latin American travel and tour operator CVC Brasil, and Vasco Turismo, one of the largest travel operations groups in Peru), strong oversight, and the ability to finance its not insignificant ambitions.
These goals include strengthening Wakanow’s market position and customer offering, an African expansion, accelerating innovation, deepening its systems and processes to realize the vision of a truly world class online travel agency with African roots.
