Teraco gets R158m data centre boost

Issued by Teraco Data Environments
Johannesburg, Jun 2, 2011

Teraco Data Environments has received a R158 million financing boost from the International Finance Corporation (IFC), the Development Bank of Southern Africa (DBSA), as well as other investors.

The financing includes a combination of both equity and debt, with the IFC, a member of the World Bank Group, becoming an equity shareholder in Teraco and the DBSA providing R80 million of senior debt.

In a press conference in Johannesburg this morning, Teraco said all of the company`s current investors also participated in the financing, including Treacle Private Equity, Pentangle Group and Marlow Capital. Marlow Capital acted as financial advisor on the financing.

The company revealed that the financing will be used to further support the company`s growth.

Teraco group CEO Tim Parsonson, said the company`s Johannesburg co-location data centre will be expanded to three times its current size and two new co-location facilities will be opened in Durban and Cape Town.

“We are very excited about bringing into Teraco two quality finance providers in the IFC and the DBSA, who will help us with our next phase of exciting growth,” said Parsonson.

During the event, Saleem Karimjee, IFC senior manager, said data centres are becoming a critical part of the technological infrastructure needed for growing companies to innovate and compete globally.

“IFC is enthusiastic about Teraco`s pioneering plans in the sector, especially across the African region. Our investment in Teraco continues our commitment to helping African businesses harness new technology and approaches to managing information.”

Lucy Chege, DBSA divisional executive, said the bank is pleased to be participating in the transaction because Teraco signifies a positive change towards addressing the effective use of resources and improving efficiencies in the telecommunications sector.

“This is in line with the DBSA`s objective to support businesses within the telecommunications sector that will have a positive development impact and promote streamlined functioning of the sector.”

According to Chege, Teraco`s business is currently at a start-up phase and has to date only been funded through equity and shareholder loans.

She noted that commercial banks have not yet stepped up to provide debt finance partly due to Teraco being an early stage investment focusing on adopting a fairly new business model in SA.

“Infrastructure is funded and supported by the DBSA where market failure is experienced and there is lack of appetite or support from other funding agencies or the private sector commercial institutions for the funding required to implement a development project or programme,” she said.

Chege also expressed that she expects the project to result in temporary and permanent job opportunities through the installation of services and construction of the proposed expansion.

“Creation of additional capacity will benefit the local economic activity and the ICT sector as a whole.”

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