Berkshire Partners Buys Majority Stake in Africa’s Largest Data Center Firm

Boston-based Berkshire Partners, a private equity player with a number of deals in the data center services market under its belt, has acquired a majority stake in Teraco, which according to Bloomberg is South Africa’s largest data center provider.

Permira, the London-based private equity firm that backed a management buyout of Teraco in 2015, will remain a “significant investor,” Teraco said in a statement. Permira has been shopping Teraco around since at least early last year, according to a Bloomberg report that said a sale could fetch anywhere between $600 million and $1 billion. Financial details of the Berkshire deal were not disclosed.

With the new investor on board, Teraco is looking to double its existing data center capacity as it seeks to capture growing opportunity in Sub-Saharan Africa. Like in other places around the world, businesses in the region are going through digital transformation, driving demand for data center services, according to a statement by Michail Zekkos, a partner at Permira. Zekkos also cited cloud penetration and an early-stage outsourcing market as reasons to believe there are solid growth opportunities for Teraco.

“We believe that Teraco is exceptionally well-positioned to capitalize on the fast growth of the Sub-Saharan data center infrastructure market given its highly interconnected ecosystems, well-designed facilities, and ability to offer a wide array of deployments,” Larry Hamelsky, a Berkshire managing director, said in a statement.

Total power capacity across Teraco’s four data centers (two in Johannesburg, one in Cape Town, and one in Durban) is 30MW, the company said. Jan Hnizdo, its managing director, said the company’s aim is to get to 60MW over the next few years. On its website, the company said its plan was to expand the Cape Town facility and build a new one in Gauteng.

Berkshire’s previous investments in the data center industry include an acquisition together with Abry Partners of US colocation and interconnection heavyweight Telx in 2011 from GI Partners. They have since sold Telx to Digital Realty Trust.

A more recent Berkshire deal is its investment in the edge computing startup Vapor IO last year. Vapor’s Series C funding round, which Berkshire led, helped the startup fund its acquisition of the edge data center colocation business it had launched together with the American cell tower giant Crown Castle.