LONDON Dec 4 Permira has made its
first investment in Africa with the purchase of data centre
services provider Teraco, the European private equity fund said
on Thursday, the latest major buyout house to make a foray into
Teraco, the largest provider of carrier neutral data centre
services in sub-Saharan Africa, hopes to tap into rising
internet usage and increased data centre outsourcing.
Companies like Teraco act as third parties allowing
customers to switch telecommunications providers, and are not
linked to an existing mobile phone carrier or Internet service
The terms of the Permira transaction were not disclosed.
Western private equity funds have increasingly been looking
to Africa as they face strong competition for deals at home.
U.S. buyout house KKR made its first African investment
earlier this year in Afriflora, an Ethiopian flower-growing
company, for around $200 million.
"The fact you're seeing big guys doing private equity
investments in Africa is very good. They're paying consistent,
high multiples," said Miguel Melo Azevedo, Head of Investment
Banking Africa at Citi, speaking generally on private
equity deals at an African investment round table at the bank on
"Normally out of every 10 opportunities you look at you do
one. In Africa, maybe it's one in every 15," Azevedo said,
adding that while funds were attracted to the continent, its
developing economy meant the deals remained small.
Levels of private equity investment in Africa hit $2.2
billion so far this year, their highest level since at least
2000. More than half of that has been in the telecommunications
industry, according to Thomson Reuters data, followed by the
industrials and energy sectors.
Teraco emerged in 2008 following the deregulation of the
South African telecoms market. It helps customers securely store
their information systems and networking equipment, with data
centres in Cape Town, Durban and Johannesburg.
Permira's purchase of 100 percent of the company's equity in
partnership with management is the ninth from Permira's 5.3
billion-euro ($6.6 billion) Fund V. The sellers were local VC
funds, as well as management and private investors. The fund is
now more than 30 percent invested.
($1 = 0.8056 Euros)
(Reporting by Freya Berry; Editing by Michael Urquhart)