South Africa-based data center operator Teraco Data Environments has been acquired by Permira, a European equity fund looking to diversify its holdings and gain a foothold in the African telecommunications market.

Permira has bought 100 percent of the company’s equity in partnership with its current management, but further terms of the deal were not disclosed. The acquisition is expected to complete in the first quarter of 2015.

“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,” said Lex Van Wyk, co-founder and CEO of Teraco.

“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.”

Set for growth
Teraco was founded in 2008 following the deregulation of the South African telecoms market. It has grown to become the largest provider of carrier-neutral colocation services in sub-Saharan Africa.

The company runs facilities in Cape Town, Durban and Johannesburg, serving more than 170 customers and maintaining a total of 6,500 sq m of white space.

Teraco completed several expansions of its Johannesburg and Cape Town facilities during 2014, and next year will see significant further upgrades to Johannesburg. All three data centers are connected to the region’s largest exchange point – ‘NAP Africa’.

This is Permira’s first ever investment into an African company. The fund says only 10 percent of data center services in South Africa have been outsourced, compared with a third in the US and a quarter in Europe, indicating strong growth potential for companies like Teraco.

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

According to data published by Thompson Reuters, levels of private equity investment in Africa have hit US$2.2 billion in 2014, highest since at least 2000. More than half of this money has been spent on telecommunications, including data centers.