Teraco Data Environments, a data centre and interconnection solutions provider, has announced that Digital Realty has entered into an agreement to acquire a majority stake in the company from a consortium of investors, including Berkshire Partners and Permira.
After closing, Digital Realty will own approximately 55% of the total equity interests in Teraco, while the remaining 45% will be held by a consortium of existing shareholders, including management, Berkshire Partners LLC, Permira, van Rooyen Group, Columbia Capital, Stepstone Ventures and the Teraco Connect Trust.
Digital Realty, a San Francisco-based real estate investment trust led by chief executive Bill Stein, has a market value of about $51 billion. It competes with other digital infrastructure REITs including Equinix Inc and American Tower Corp, which in November struck a deal to buy data center operator CoreSite Realty Corp, Bloomberg reported.
The sector is consolidating. CyrusOne Inc. and QTS Realty Trust both agreed to be taken private in 2021. In 2020, Digital Realty completed the roughly $7 billion acquisition of InterXion, its biggest deal on record, according to data compiled by Bloomberg.
Permira first agreed to invest in Teraco in 2014. Berkshire in 2019 became the largest shareholder in Teraco after acquiring a stake from Permira.
The transaction values Teraco at about $3.5 billion, Bloomberg reported, citing Digital Reality.
Johannesburg based Teraco operates seven high-quality facilities with 75 megawatts of critical power load, serving more than 600 clients, including global Internet companies, across six core ecosystems – connectivity providers, managed service providers, cloud, content, enterprise and financial services.
With more than 22,000 interconnects, Teraco’s data centres are the most interconnected facilities in Africa.
The Digital Realty transaction will provide Teraco continued access to capital to grow, it said in a statement on Tuesday (4 January). The Teraco and NAPAfrica brands will continue.
“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,” said Teraco chief executive officer Jan Hnizdo.
“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.”
The Teraco management team will remain in place and maintain day-to-day responsibility for operations in South Africa.
The transaction is expected to close in the first half of 2022 and is subject to customary closing conditions.