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LONDON (Reuters) - Permira (PERM.UL) 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 the continent.
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 provider.
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 (127.4 million pounds).
"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 Thursday.
"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.
(Reporting by Freya Berry; Editing by Michael Urquhart)