Private equity firm Permira to buy South African datacentre group Teraco

One of Europe's largest buyout firms Permira Advisers LLC has agreed to buy Teraco Data Environments, Sub-Saharan Africa's leading provider of carrier neutral datacentre services for an undisclosed sum.

In a statement yesterday, Permira said a company backed by Permira funds will acquire 100-per cent of the equity in Teraco in partnership with management. Currently, Teraco is owned by local VC funds as well as management and private investors.

This will be Permira's first investment in Africa and Permira V's ninth, which is now 30 per cent invested.

Founded in 2008 upon deregulation of South African telecom market, Teraco provides co-location and related services in highly secure and reliable data environments.

The company operates three high quality facilities in Durban, Cape Town and Johannesburg from where it serves over 170 clients, including many blue chip companies across sectors including telecom, outsourcing, content, enterprise and financial.

Teraco's datacentres are the most interconnected in Sub-Saharan Africa with customers connecting directly with each other, as well as through the region's largest- and fastest-growing internet exchange point-'NAP Africa'.

The acquisition by Permira is expected to support Teraco's growth plans, including strengthening of its sales and marketing platform and its expansion in the region.

Teraco CEO Lex Van Wyk said, ''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.''

Permira sees excellent growth opportunities in Teraco with the growth in the adoption of internet and smartphone devices in Africa as well as increased datacenter outsourcing. The South African outsourcing market is growing rapidly, with only one tenth of datacenter facilities outsourced compared with a third in the US and a quarter in Europe.

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

London-based Permira is a European private equity firm, founded in 1985. Permira funds are raised from pension funds and other institutions. The firm advises funds with a total committed capital of approximately €25 billion. Since 1985 the firm has made nearly 200 private equity investments.

Permira specialises in five key sectors including consumer, financial services, healthcare, industrials and TMT (technology, media, and telecommunications). There are currently over 25 companies in the Permira funds' portfolio including prominent names such as TeamViewer, LegalZoom.com Inc, Ancestry.com, NDS, Renaissance Learning, Metalogix and Genesys.

The firm employs approximately 120 professionals over a dozen major cities across the globe.

The transaction is expected to close in the first quarter of 2015, subject to regulatory approval and customary closing conditions.

Upon closing, Permira's Michail Zekkos and partner and co-head of the technology team Richard Sandars will join Teraco's board, Permira said.

Torch Partners served as the financial adviser to Permira on the deal while  Bruckhaus Deringer LLP and ENS were its legal advisers.