Convergence raises $296 million for the Africa Tech Fund

According to chairman Andile Ngcaba, the buyout firm Convergence Partners secured $296 million to purchase African technological assets.

The capital raise will bring Convergence’s total funds under management to about $600 million, according to Ngcaba, making it one of the first private equity funds obtained for sub-Saharan Africa this year. According to him, the majority of the fresh capital comes from pension funds, development organisations, and existing investors in the US, UK, Europe, and Africa.

According to Ngcaba, “We are seeking to invest in technology assets ranging from data centres to optic cable on land and sea.” “We have already compiled a sizable pipeline of funding targets.”

Africa’s population is expanding at the fastest rate in the world, and younger people who are more tech aware are increasingly using their mobile phones to access services like banking and shopping. Ngcaba, who was alluding to the separation between people who have access to computers and the internet and those who do not, stated that the continent needed an additional 700 data centres by 2030, as well as, more generally, roughly $100 billion in investment by that time to solve the digital divide.

Convergence wants to be involved in giving some of the capital to address this, he said, adding that this is the investment gap.

Private equity deal-makers have recently raised hundreds of billions of dollars to invest globally, but firms have been more hesitant to engage in Africa.

On the continent, substantial sums of money have been invested by other funds as Development Partners International LLP and Helios Investment Partners. Development Partners secured $900 million for projects in Africa around the end of last year. Tech behemoths like Alphabet Inc., Amazon Web Services Inc., and Equinix Inc. have also been showing more interest from abroad.

That enhances deal-making and exiting prospects for private equity and others, as well as contributing to a market that is gradually maturing, according to Ngcaba.

For the past 20 years, Convergence has operated in Africa and has made investments in businesses including Vodacom Group Ltd. and Nedbank Group Ltd.