Permira, an international private equity firm, has acquired Teraco Data Environments, the largest provider of carrier neutral datacentre services in Sub-Saharan Africa.

This transaction marks the Permira funds’ first investment in Africa.

Richard Sanders, Partner and Co-head of the Technology team at Permira, said: “We are pleased to be announcing our funds’ first investment in Africa with this exciting opportunity, which is another example of our technology strategy of backing strong market leaders in fast growing markets.”

The Permira funds’ investment will support the company’s growth plans, including the strengthening of its sales and marketing platform and its expansion into Sub-Saharan Africa.

Established in 2008 upon deregulation of the South African telecoms market, Teraco offers colocation and related services in highly secure and reliable datacentre environments.

The company operates three high quality facilities serving more than 170 clients, including many blue chip companies, across five key client hubs – telecoms, outsourcing, content, enterprise and financial.

The European private equity firm said that in Teraco, the Permira funds are “backing a leader in a market with strong fundamental growth drivers”.

Michail Zekkos, Principal at Permira, said: “As the leading carrier neutral datacentre provider with 5 growing customer ecosystems, Teraco is ideally positioned to continue supporting the critical IT infrastructure of its clients and their connectivity needs.”

The datacentre market is supported by the growth in the adoption of internet and smart devices in Africa as well as increased datacentre outsourcing.

The market in South Africa is growing rapidly, with only one tenth of datacentre facilities outsourced compared with a third in the US and a quarter in Europe.

Teraco has built an important strategic position to capture the regional opportunity as a trusted and secure partner with reliable power sources.

Lex Van Wyk, CEO, Teraco, said: “The management team is excited to welcome the Permira funds as a shareholder and we are optimistic about the opportunities provided by this new partnership moving forward. Timing is key in these situations, Teraco is now a mature business with a proven strategy, and the Permira funds’ experience in investing in technology markets globally will help Teraco deliver its ambitious growth goals.”

Zekkos added: “We look forward to partnering with Lex Van Wyk and his experienced management team to support the next phase of growth of this high-quality, uniquely connected datacentre business.”
The transaction is subject to regulatory approval and customary closing conditions, and is expected to complete in Q1 2015.

Upon closing, Permira’s Richard Sanders and Michail Zekkos will join Teraco’s board.

This investment represents the ninth investment from Permira V, which is now over 30% invested.
The sellers are local VC funds as well as management and private investors.

Torch Partners served as the sole financial adviser to the Permira funds and Freshfields and ENS served as their legal advisers.

The Permira funds, raised from pension funds and other institutions, make long-term investments in companies with the ambition of transforming their performance and driving sustainable growth.

Founded in 1985, the firm advises funds with a total committed capital of approximately €25bn ($30.74bn) and has made over 200 private equity investments.