US private equity firm buys major stake in Teraco

Berkshire Partners LLC acquired a stake in Teraco Data Environments Pty Ltd., becoming the biggest shareholder in Africa’s largest data-centre to capitalise on growing demand for internet and cloud-based services on the continent.

The Boston-based private-equity firm is sweeping in on Johannesburg-based Teraco as technology plays a more integral part in the life of consumers and businesses. Teraco was expected to fetch between $600 million (R8.25 billion) and $1 billion (R13.76 billion), including debt, people familiar with the matter said in November.

“Berkshire Partners is a committed long-term partner that will assist us with future growth plans and additional investment,” Teraco Managing Director Jan Hnizdo in an email. The value of the transaction wasn’t disclosed.

The purchase comes after London-based Permira Holdings LLP, which backed a management buyout of the company in 2015, sought a buyer for part of its stake in the company, which also operates data centers in Cape Town and Durban. Permira will stay on as a shareholder in Teraco, Michail Zekkos, a partner in the firm, said.

The business plans to double its installed power load capacity to 60 megawatts in the next four to five years, Teraco’s Hnizdo said. Clients include Amazon Web Services and China Telecom Global Ltd., its website shows. The closely-held company will have spent R4.5 billion ($325 million) on building data-services centers in South Africa when the current investment cycle ends in 2019.

Read: Teraco data centres to get SACS cable boost

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US private equity firm buys major stake in Teraco