US Private Equity Firm Berkshire Buys Major Stake In African Data Center Teraco

Boston-based private equity firm Berkshire Partners LLC has bought a major stake in Teraco Data Environments Pty Ltd. to become the largest shareholder in Africa’s most significant data center.

A move in the direction of capitalizing on growing demand for cloud-based services in Africa, Berkshire sweeps in on the Johannesburg-based firm as technology becomes a big role player in the lives of consumers and business, connectivity-wise.

While the amount involved in the deal is yet to be confirmed, Teraco, the largest provider of carrier-neutral data center services in sub-Saharan Africa was expected to get funds between USD 600 Mn and USD 1 Bn, debt included.

“Berkshire Partners is a committed long-term partner that will assist us with future growth plans and additional investment,” Teraco Managing Director Jan Hnizdo said. 

After London-based Permira Holdings LPP searched for a buyer for its stake in Teraco, Berkshire comes as a find for the stakeholder, which backed a management buyout of the company in 2015. Teraco, who also has operations in Cape Town and Durban, will yet retain Permira as its shareholder.

2014, Permira made its first African investment by purchasing Teraco with the hopes to tap into rising internet usage and increased data center outsourcing. Two months ago, Techcentral reported that the investor was working with an adviser to find a buyer for Teraco.

Over the next four to five years, the business schemes to double its installed power load capacity to 60 megawatts. The African company’s clientele carries Amazon Web Services and China Telecom Global Ltd. At the end of the company’s current investment cycle, Teraco would have spent USD 325 Mn building data service centers in South Africa.

In line with a WeeTracker report, Teraco, March 2018 was chomping at bit to expand its services in South Africa, which was a moved that followed the South African capital’s upgrade and flourish to accommodate more local and international operations.

Institutional investors are developing a taste for data centers, partly because technology is increasingly more integral to consumers and businesses. The Demand for associated data storage and services is viewed as a shield against the industry’s potential cyclical downturn.

Featured Image: Data Center Map