Berkshire buys major stake in Teraco

Berkshire Partners LLC acquired a stake in Teraco, 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 and $1 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 said 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, 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.

Deals rumoured

It was previously reported that Permira was working with an adviser to find a buyer for Teraco, according to people with knowledge of the matter.

The company was predicted to attract interest from private equity and industry-focused investors including General Atlantic and Digital Bridge Holdings, as well as other data centre owners.

Reporting with Bloomberg.

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Berkshire buys major stake in Teraco