Teraco sold in deal said to be worth as much as R14-billion

Berkshire Partners has acquired a stake in Teraco Data Environments, becoming the biggest shareholder in Africa’s largest data centre operator 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 US$600-million and $1-billion, including debt, people familiar with the matter said in November.

Citing unnamed sources, telecommunications finance website TMT Finance reported earlier that Berkshire Partners met Permira’s asking price of $1-billion (about R14-billion). The sources said that Teraco has been sold at a valuation multiple of 22 or 23 times earnings (before interest, tax, depreciation and amortisation).

TMT Finance said Permira bought Teraco for about $120-million in 2014.

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

The purchase comes after London-based Permira Holdings, 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 centres 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 60MW in the next four to five years, Teraco’s Hnizdo said. Clients include Amazon Web Services and China Telecom Global, its website shows. The closely held company will have spent R4.5-billion on building data centres in South Africa when the current investment cycle ends in 2019.  — (c) 2019 Bloomberg LP, with additional reporting (c) 2019 NewsCentral Media