South Africa’s largest data centre operator, Teraco Data Environments, has been acquired by Digital Realty in a deal that values Teraco at an astonishing R55.5-billion.
That means Teraco, which was founded just 13 years ago, is now worth more than twice as much Telkom, which had a market capitalisation of R27.6-billion at the close of the JSE on Monday.
Digital Realty, which is listed on the New York Stock Exchange and describes itself as the “largest global provider of cloud and carrier-neutral data centre, co-location and interconnection solutions”, is acquiring a majority stake (55%) in Teraco from a consortium of investors, including Berkshire Partners and Permira. Teraco management will remain invested in the company.
Teraco operates seven data centre facilities with 75MW of critical power load, serving more than 600 clients, including global Internet companies. Clients include connectivity providers, managed service providers, cloud companies, content providers, enterprises and financial services firms.
“The Digital Realty transaction will result in a powerful combination providing Teraco continued access to capital to grow,” Teraco said in a statement on Tuesday. “Being backed by a global leader will enable Teraco to access skills and knowledge from the Digital Realty global platform and continue to grow the Teraco ecosystem.”
Existing Teraco investors, including “several leading global digital infrastructure investors with significant experience investing in Africa”, are keeping a “significant portion of their equity interests, demonstrating their conviction in Teraco’s future growth prospects”, the company said.
Local management team
“The continuing involvement of management and the existing investors is consistent with Digital Realty’s new-market entry strategy of partnering with strong local management teams and experienced regional capital partners.”
After closing, Digital Realty will own about 55% of the total equity interest in Teraco, while the remaining 45% will be held by a consortium of existing shareholders, including management, Berkshire Partners, Permira, Van Rooyen Group, Columbia Capital, Stepstone Ventures and the Teraco Connect Trust.
The transaction is expected to close in the first half of 2022. Goldman Sachs is acting as financial advisor to Teraco and Weil, Gotshal & Manges and ENSafrica are serving as legal advisors to Teraco. Solomon Partners is acting as financial adviser, and Latham & Watkins and Bowmans are acting as legal advisors to Digital Realty. – © 2022 NewsCentral Media
