Digital Realty takes stake in Teraco pushing value to $3.5bn

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Africa’s largest data centre services provider has joined the likes of Interxion and Ascenty to become a Digital Realty company.

Digital Realty confirmed today that it will take a 55% stake in Teraco, concluding the deal in the first half of 2022. The stake was previously held by a consortium comprising Berkshire Partners, Permira and others.

Upon closing the remaining 45% will be held by a consortium of existing shareholders, including Berkshire Partners LLC and Permira, alongside van Rooyen Group, Columbia Capital, Stepstone Ventures, the Teraco Connect Trust and management.

The deal values Teraco – Africa's largest data centre services provider – at approximately $3.5 billion. The Teraco and NAPAfrica brands will continue to operate.

Teraco CEO Jan Hnizdo (pictured) said: “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.

“Our combined platform will be uniquely positioned to serve the full customer spectrum with the ability to support their growth around the world.  We look forward to working with the Digital Realty team to extend our state-of-the-art data centre and connectivity solutions to capitalise on the favourable industry trends and tremendous market opportunity.”

In line with Digital Realty’s new market entry strategy Hnizdo and the Teraco management team will remain in their positions while Teraco’s existing investors are "rolling forward a significant portion of their equity interests, demonstrating their conviction in Teraco’s future growth prospects". 

On the operational front Teraco said the new backing will allow it to "access skills and knowledge from the Digital Realty global platform and continue to grow the Teraco ecosystem".

In the last 12 months, Teraco secured a $166.6 million loan to finance its growth and completed the first phase of CT2, located in Cape Town, as well as JB3, located in Ekurhuleni, east of Johannesburg.

It's data centres across South Africa now offer interconnection with the ACE cable – the eighth submarine cable system to connect at Teraco facilities.

With more than 22,000 interconnects, Teraco’s data centres are the most interconnected facilities in Africa, allowing clients to connect directly to each other, to the onramps of all major cloud providers, as well as to the continent’s largest and fastest-growing Internet Exchange Point, NAPAfrica.

Digital Realty CEO A. William Stein said: “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.  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 metro areas.  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.”