Digital Realty to take majority stake in Africa's Teraco in $3.5B deal

Digital Realty Trust Inc. agreed to buy a majority interest in Teraco Data Environments (Pty.) Ltd. from an investor consortium in a deal that values the Africa-based carrier-neutral colocation provider at about $3.5 billion.

The data center real estate investment trust will hold about 55% of the total equity interests in Teraco. The remaining 45% will be owned by a group of Teraco's existing investors, which include the company's management, Berkshire Partners LLC, Permira Advisers Ltd., van Rooyen Group, Columbia Capital LP, Stepstone Ventures and the Teraco Connect Trust.

Teraco's current investors, including several global digital infrastructure investors, are rolling forward a significant portion of their stakes between 3.5 years and 5.5 years after closing. The REIT is entitled to call those stakes between 5.5 years and 6.5 years after completion.

The REIT will fund the transaction using proceeds from its private capital and capital recycling initiatives, committed funding under the existing forward equity commitment and other potential future financings.

The Teraco management team led by CEO Jan Hnizdo will continue to manage the company's day-to-day operations.

The deal is set to be completed in the first half of 2022.

Solomon Partners is financial adviser to Digital Realty, while Latham & Watkins LLP and Bowmans are its legal advisers.

Goldman Sachs is financial adviser to Teraco and Weil Gotshal & Manges LLP and ENSafrica are its legal advisers.