Buyout Firm Convergence Raises $296 Million Africa Tech Fund
Convergence Partners, a leading private equity investor dedicated to the technology sector across sub-Saharan Africa, closed its Convergence Partners Digital Infrastructure Fund (CPDIF) at $296 million, surpassing its initial target by over 18%. This achievement is despite subdued private capital fundraising on the continent in 2022.
Buyout firm Convergence Partners raised $296 million to buy African technology assets, Chairman Andile Ngcaba said.
The recent close of CPDIF marks a significant milestone for the company, as it represents Convergence Partners’ largest fund to date, bringing total funds under management to more than $600 million. He further stated that the new money is mainly from previous investors, development agencies, and pension funds in the US, UK, Europe, and Africa.
“We are looking to invest in technology assets ranging from data centers to optic fiber on land and sea,” “We have already identified quite a pipeline of targets for the money.”
CPDIF was launched in June 2020 and had a first close of $120 million in July 2021. The fund is focused on investing in digital infrastructure opportunities across sub-Saharan Africa. This includes investments in fiber networks, data centers, wireless, towers, cloud, Internet of Things (IoT), artificial intelligence (AI), and other critical digital infrastructure that is vital for the growth of the digital economy in the region.
In addition to investing in physical assets, CPDIF is also aimed at developing and supporting initiatives that promote access to education, financial services, healthcare, and other essential services through digital technologies.
Africa has the fastest-growing population in the world, with more tech-savvy youth increasingly using their mobile phones to access services from banking to shopping. The continent needs another 700 data centers by 2030, and more broadly about $100 billion in investment by then to address the digital divide, referring to the gap between those who have access to computers and the internet, and those that don’t.
“That is the gap in investment, and Convergence wants to be involved in providing some of the capital to address this,” he said.
While private equity deal-makers have raised hundreds of billions of dollars in recent years to deploy across the globe, firms have been more cautious about investing in Africa. Some large firms, including Carlyle Group and Blackstone Inc., reduced their exposure to the continent.
Other funds such as Helios Investment Partners and Development Partners International LLP have deployed large amounts of capital on the continent. Late last year, Development Partners raised $900 million for African investments. Foreign interest by tech giants including Alphabet Inc., Amazon Web Services Inc., and Equinix Inc. has also been increasing.
“That contributes to a slowly maturing market, and also increases deal-making and exiting opportunities for private equity and others,” said Ngcaba]
Convergence has been operating in Africa for 20 years and previously invested in companies such as Vodacom Group Ltd. and Nedbank Group