Data center firm Digital Realty to buy majority stake in Africa's Teraco

Digital Realty top boss William Stein said the deal would add regional scale with a "network-dense portfolio in South Africa's most strategically important metros".

Data center operator Digital Realty Trust said on Monday it would acquire a majority stake in Africa-based Teraco, valuing it at about $3.5 billion, in a bid to expand internationally as the pandemic fuels demand.

Lockdowns and remote work have accelerated the shift to online ecosystems and cloud computing, driving up demand for data centers, which are physical spaces housing computers that store and process data. That has made data center operators a key space for private equity investments since the pandemic, with both CyrusOne and QTS Realty Trust also signing multi-billion dollar deals in 2021 to capitalize on the boom, and driving consolidation in the sector.

Digital Realty, which has more than 280 data centers across the world, said it would buy the 55% stake in the Africa-based data center services provider from a consortium of investors including Berkshire Partners and Permira. The deal is expected to be about 1% dilutive to Digital Realty's core funds from operations (FFO) per share in 2022 and add to it after 2023. Digital Realty top boss William Stein said the deal would add regional scale with a "network-dense portfolio in South Africa's most strategically important metros".