Data centre operator Digital Realty has agreed to acquire a majority stake in Teraco as it looks to expand in the high-growth African market.
Digital Realty will acquire the African data centre company from a consortium of investors, including Berkshire Partners and Permira, in a transaction valuing Teraco at approximately $3.5bn.
The company said on Monday (3 January) that the deal will establish it as the leading colocation and interconnection provider on the African continent.
Digital Realty will own approximately 55pc of the total equity interests in Teraco, while the remaining 45pc will be held by existing investors. The deal is expected to close in the first half of this year.
The US data centre company said Teraco’s leading position in South Africa, along with its own connectivity hubs in Nigeria and Kenya, will strengthen its pan-African position in a market that’s expected to grow significantly in the next few years.
“This investment will enhance our ability to serve customers on a global basis by adding significant regional scale with a premier, network-dense portfolio in South Africa’s most strategically important metros,” Digital Realty CEO William Stein said.
“Teraco will also advance our strategy of increasing exposure to highly connected, network and carrier-dense facilities to enhance our global coverage and connectivity capabilities.”
Teraco has historically generated double-digit growth in key financial metrics such as revenue and participants on its platform. It has freehold ownership to six of its seven data centres, representing over 85pc of its total revenues.
The company also owns land adjacent to its Johannesburg and Cape Town campuses that will allow for additional capacity growth.
“We are excited to enter our next chapter by joining forces with Digital Realty to create a truly global, scaled platform serving our customers in Africa and beyond,” said Teraco CEO Jan Hnizdo.
“Our combined platform will be uniquely positioned to serve the full customer spectrum with the ability to support their growth around the world.”
The Teraco management team will remain in place and will maintain day-to-day responsibility for operations in South Africa.
Digital Realty supports enterprises and service providers with data centre and interconnection services, with 280 facilities across 24 countries in six continents.
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