When the Carlyle Group, a global alternative asset manager, did its first sub-Saharan African deal last November, it chose to do business with Phuthuma Nhleko and his Pembani Group, a private investment vehicle.

The deal with Carlyle, which has US$156bn in funds under management, added to Nhleko's deal-making record. The Carlyle Group co-invested with Pembani into the Export Trading Group, an agricultural commodities supply chain manager. The investment with the Pembani Remgro Infrastructure Fund may be only a fraction of the Nasdaq-listed asset manager's funds, but it represents an important foray into Africa. Johann Rupert's Remgro is one of SA's top-four investment firms.

Pembani was founded in 1994 by a group that included Nhleko. The company was an early investor in Johnnic Holdings (which evolved into Times Media Group, the publisher of the FM) and one of Johnnic's first large investments was mobile phone company MTN Group, which appointed Nhleko as chairman, and then CEO in 2002.

Nhleko took MTN's expansion to a new level and left as CEO in March 2011 to focus on Pembani. Soon after his return as executive chairman of Pembani, Nhleko spotted an opportunity in debt-laden Afrisam, SA's second-largest cement company. Afrisam, previously Swiss-based Holcim's SA operation together with Aveng, was sold at the top of the market to a consortium led by Bunker Hills Investments, a black economic empowerment entity created in 2006 especially for the acquisition.

The consortium bought 85% of Afrisam for R23bn in 2007. Under the leadership of Eltie Links, Bunker Hills itself acquired a debt-funded 37% share of Afrisam, which gave it operational control. Holcim retained 15%. The Public Investment Corp (PIC) took 20% and warehoused Bunker Hills' stake. JPMorgan and Citigroup provided the largest portion of the loans and took convertible preference shares.

But the debt required up to R6bn/year to service and the market contracted during the global economic crisis, choking Afrisam's revenue and putting it on the brink of default and possible liquidation. Nhleko's Pembani, which was then Worldwide Africa Investment Holdings, made an unsolicited offer to acquire Bunker Hills' shares in June 2011. Bunker Hills declined.

The overseas holders of the liability, including Citigroup , BlackRock Advisors and JPMorgan , sold off their portion of the R16bn outstanding debt for R3,7bn to Pembani. Bunker Hills was out witted. Pembani and the PIC began converting the debt into equity and were opposed by Bunker Hills and Holcim, resulting in an acrimonious legal process that was settled by a high court judgment. The creditors prevailed, diluting Holcim and Bunker Hills' combined investment to less than 2% of Afrisam's shares.

Pembani got operational control and a 30,5% stake in Afrisam after the conversion of the debt as the PIC reduced its resultant 99% stake to its current 57%. By April 2013 the parties had managed to shave R15bn off Afrisam's debt.

Though the construction industry "isn't flying", says Rob Wessels, an executive director of Pembani, the company is comfortable with Afrisam's "solid performance" since it took over in 2011. Wessels would not be drawn on the amount of debt left on Afrisam's books, saying only that it was a "sustainable amount. We've put this company on a sound footing with the restructure."

Pembani has said that Afrisam has a role to play in infrastructure projects in the rest of the continent. It intends to extend its influence beyond the current 62,5% stake in Tanzania's Tanga Cement Company. "In Tanga Cement, we now have a platform to take the company to another level in Africa," says Wessels. Pembani's focus is on energy, mining, and resources.

A consortium it was part of acquired an 8% stake in the SA coal operations of BHP Billiton. That extended Pembani's coal interests from the indirect 1,5% it owns in Exxaro Resources, and its unlisted 93,6% of Pembani Coal Carolina. A long-held investment is 20% equity in Engen. Since 1995, Pembani has held a controlling interest, now 75%, in diesel, petrol, paraffin and lubricants provider Afric Oil. Clients include governments outside SA.