Digital Realty will acquire 55% of South African data company, Teraco for $3bn
Digital Realty, an American real estate investment trust, has agreed to buy a majority stake in Teraco Data Environments, a South African data center and interconnection solutions provider. Teraco released a statement on the subject.
Following the transaction, which is expected to close in the first half of 2022, Digital Realty will own approximately 55 percent of Teraco’s total equity interests, with the remaining 45 percent held by a consortium of existing shareholders that includes management, Berkshire Partners LLC, Permira, van Rooyen Group, Columbia Capital, Stepstone Ventures, and the Teraco Connect Trust.
According to a Teraco statement, Digital Realty has entered into a binding agreement to acquire a majority stake in Teraco from a group of investors led by Berkshire Partners and Permira.
Teraco also claims that the transaction will result in a powerful combination that will provide Teraco with ongoing access to capital to grow. Teraco will be able to access skills and knowledge from the Digital Realty global platform as well as continue to grow the Teraco ecosystem because it is backed by a global leader like Digital Realty.
Teraco CEO Jan Hnizdo says the company is excited to embark on its next chapter by collaborating with Digital Realty to build a truly global, scaled platform that will serve customers in Africa and beyond.
“Our combined platform will be uniquely positioned to serve the entire customer spectrum while also supporting their global growth.” We are excited to collaborate with the Digital Realty team to expand our cutting-edge data center and connectivity solutions in order to capitalize on the favorable industry trends and tremendous market opportunity.”
The reported $3 billion deal dwarfs MainOne’s acquisition.
The latest development comes just a month after MainOne, a leading Nigerian and West African cable and data center service provider, was acquired by Equinix, an American internet company. This acquisition, like Equinix’s, marks Digital Realty’s entry into the African telecoms and data space.
According to Bloomberg, this latest transaction values Teraco at $3 billion, and the majority stake to be acquired could cost Digital Realty, based in San Francisco, $3 billion. MainOne, on the other hand, was fully acquired by Equinix for $320 million, a valuation that many analysts thought was too low.
People have asked me if MainOne’s valuation is too low, so I thought I’d share my thoughts. First and foremost, disregard any valuation ideas you may have formed as a result of the recent unicorns.
December 7, 2021 — Ayobami (@BaldieBam)
Teraco’s data centers have over 22,000 interconnects, making them the most interconnected facilities in Africa, allowing clients to connect directly to one another. This is why Digital Realty CEO A. William Stein regards this transaction as highly strategic, as it will improve the company’s ability to serve customers globally.
This highly strategic transaction immediately cements Digital Realty as the leading colocation provider in Africa, a region experiencing rapid digital transformation. Teraco is the industry leader in South Africa and the continent’s connectivity hub. 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.”
William Stein, CEO Digital Realty
The Teraco management team will remain in place and will be in charge of day-to-day operations in South Africa. Existing Teraco investors are rolling forward a significant portion of their equity stakes.
