NYSE-listed cloud and carrier-neutral data centre multinational Digital Realty has entered into a definitive agreement to acquire 55% of carrier-neutral data centre company Teraco Data Environments from a consortium of investors, including investment companies Berkshire Partners and Permira, with the transaction expected to close in the first half of this year, subject to conditions, the companies said on January 4.

The acquisition will result in a powerful combination and provide Teraco continued access to capital to grow. Teraco’s existing investors, including global digital infrastructure investors with significant experience investing in Africa, are rolling forward a significant portion of their equity interests, demonstrating their conviction in Teraco’s future growth prospects, said Teraco CEO Jan Hnizdo.

The continuing involvement of management and the existing investors is consistent with Digital Realty’s new market entry strategy of partnering with strong local management teams and experienced regional capital partners, the companies said.

The Teraco and Internet exchange point NAPAfrica brands, which have a global reputation for service, quality and client focus, will continue. Being backed by a global leader will enable Teraco to access skills and knowledge from the Digital Realty global platform and continue to grow the Teraco ecosystem, Hnizdo said.

After closing, Digital Realty will own about 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, Permira, Van Rooyen Group, Columbia Capital, Stepstone Ventures and the Teraco Connect Trust.

“This highly strategic transaction immediately cements Digital Realty as the leading co-location provider in Africa, a region experiencing rapid digital transformation. Teraco is the industry leader in South Africa and the continent’s connectivity hub,” said Digital Realty CEO A William Stein.

“This investment will enhance our ability to serve customers on a global basis by adding significant regional scale with a premier, network-dense portfolio in South Africa’s most strategically important metro areas. Teraco will also advance our strategy of increasing exposure to highly connected, network- and carrier-dense facilities to enhance our global coverage and connectivity capabilities,” he notes.

“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 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 Teraco management team is led by Hnizdo, who has helped drive Teraco’s significant growth over the last decade. He is supported by an experienced and highly qualified local management team.