Equinix set to Acquire MainOne for $320 Million as it Plans Expansion into Africa

Global digital infrastructure company, Equinix, today announced its expansion into Africa through its intended acquisition of MainOne, a leading West African data center and connectivity solutions provider, with presence in Nigeria, Ghana, and Côte d’Ivoire.

The all-cash deal is expected to close in Q1 of 2022, subject to the satisfaction of customary closing conditions including the requisite regulatory approvals.

The transaction has an enterprise value of US $320 million and is expected to be AFFO accretive upon close, excluding integration costs, marking the first step in Equinix’s long-term strategy to become a leading African carrier neutral digital infrastructure company. With more than 200 million people, Nigeria is Africa’s largest economy and, along with Ghana, has become an established data center hub. This makes the acquisition a pivotal entry point for Equinix into the continent. 

Last year, Equinix expanded to India through the acquisition of GPX India for $161 million and acquired 13 data centers from Bell Canada for $780 million. It recently announced that it was going to accelerate its regional digital transformation in the UK with the development of its fifth data center (£61million) in Manchester which is scheduled to open in the first half of 2022

Equinix believes MainOne to be one of the most exciting technology businesses to emerge from Africa.

Founded by Funke Opeke in 2010, the company has enabled connectivity for the business community of Nigeria and now has digital infrastructure assets including three operational data centers, with an additional facility under construction expected to open in Q1 2022. Upon closing, these facilities will add more than 64,000 gross square feet of space to Platform Equinix, with 570,000 square feet of land for future expansions. MainOne owns and operates a subsea network from Nigeria to Portugal, as well as 1,200 kilometers of reliable terrestrial fiber network across southern Nigeria. These are all improving connectivity to and from Europe, West African countries, and the major business communities in Nigeria. When completed, this acquisition will extend Platform Equinix into West Africa, giving organizations based inside and outside of Africa access to one of the world’s fastest-growing markets.

Since inception, MainOne has invested over $400 million in infrastructure in West Africa as part of its efforts to bridge the digital divide and enable the digital economy. The investments include submarine cables, terrestrial fibre networks, and Points of Presence (POPs) across the region.

Charles Meyers, President, and CEO, Equinix said, “The acquisition of MainOne will represent a critical point of entry for Platform Equinix into the expansive and rapidly growing African market. MainOne’s leading interconnection position and experienced management team represent critical assets in our aspirations to be the leading neutral provider of digital infrastructure in Africa. Growth of data consumption in Africa is amongst the fastest in the world, and our customers are looking for a trusted partner to pursue the opportunities presented by broad mobile adoption and greater connectivity across the region. MainOne’s infrastructure, customer relationships, partner ecosystem, and operating capability will extend the reach of Platform Equinix and bolster opportunities for customers in Africa and throughout the world.”

Under the terms of the transaction, the management team, including CEO Funke Opeke, will continue to serve in their respective roles. Opeke holds a master’s in engineering from Columbia University and was named one of the World’s Top 50 Women in Tech by Forbes in 2018 for her efforts in sparking internet adoption. She was also recently named one of the Top 10 Women to Watch in the Data Center Industry by Data Centre Magazine.

John Dinsdale, Chief Analyst & Research Director, Synergy Research Group said, “Africa has been the missing piece in the Equinix jigsaw, and this acquisition of MainOne will be a great first step onto the continent. The demand for data center services in Africa is strong, with Nigeria at the epicenter of exponential economic growth in West Africa. Nigeria is Africa’s largest country by both population and economy, and its growth drivers include rapid mobile adoption, increased data consumption from its young population, good subsea and terrestrial connectivity, and a strong enterprise market. This is advancing the region toward a more digitalized economy and driving data center growth and expansion to provide much-needed digital infrastructure.”

Funke Opeke, Founder and CEO, MainOne while commenting on the proposed acquisition said, “Equinix will accelerate our long-term vision to grow digital infrastructure investments across Africa. I thank our founding shareholders led by Mr. Fola Adeola, MainStreet Technologies, AFC, PAIDF, FBN, Polaris, and AfDB for investing in the MainOne vision to bridge the Digital Divide in Africa. With similar values and culture to what we have jointly built-in twelve years, Equinix is the preferred partner for our growth journey. The MainOne team is excited about the partnership created through the acquisition, and we look forward to building our next chapter together.” 

Eugene Bergen, President, EMEA, Equinix said, “Expansion in Africa has long been a strategic priority for us. With MainOne, we have found a company that not only has a highly complementary data center and connectivity assets but can further accelerate the expansion of our business model and growth objectives. CEO Funke Opeke and her team have built a powerful and dynamic infrastructure that will enable international customers access to the continent and African organizations access to the global Equinix platform. Customers can take full advantage of Equinix’s leading global interconnection services to connect with customers and partners, participate in rich digital ecosystems and expand their business across Africa and around the world.”  

Equinix has 237 data centers across 27 countries globally. It also provides data center and interconnection services for over 10,000 of the world’s leading businesses, including more than 50% of Fortune 500 companies

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A lot of mixed reactions have trailed the acquisition deal since it was announced. Some people think Main One sold at the right price while some others think MainOne should have gotten more than $320 million from the deal. They say MainOne has invested to $400 million in the course of building internet and data infrastructure in West Africa and should be getting more.

However CEO Funke Opeke has come out to say it was a good deal and price for both parties. According to Funke and Judith Gardiner, VP Growth and Emerging Markets at Equinix, in an interview with Techcrunch,

“Interesting question. First, I think Equinix is gaining a competitive, informed price for the shares in MainOne and the shareholders retained a leading investment bank to run a competitive process. And we’re very satisfied and pleased with the offer made by Equinix and the value they represented to the shareholders and to the business going forward. But they were not the only interested party.”

“Now, of course, we’ve raised capital through the years, but not all the capital we’ve raised is equity. In fact, MainOne has not raised equity since the initial founding of the company. We have raised debt, we have refinanced debt, we have extended that debt to grow the business. So when you look at the sale of shares in MainOne and the value, one, you shouldn’t say “OK, because MainOne has raised this much capital over the years, then we have to multiply that by a certain amount to achieve the value of the business.””

“The other thing, of course, is you have to look at the revenue and profits generated [by] the business, earnings multiples of the business, and I can assure you that the shareholders of MainOne who are selling their shares are seasoned investors. And I think they are pleased with the levels of returns that they are achieving.”

Funke also added that it was not a distressed sale as some people may think.

“Not at all. I mean, we’re doing well, we’re having one of our best years ever. Our businesses growing, responding to the challenges faced in our region.”

“But this is no kind of distress sale. Our shareholders who are financial investors have been in the company from the initial investors almost 13 years around 2008 to all the other institutional investors who came in in 2009. And you would agree with me, but that is an extensive period. But these are also infrastructure investors who realize that it takes time for the infrastructure to mature and become productive. They have seen their investment become productive for them in recent years and this was a good time to exit and they couldn’t hand it off to a better company than Equinix. Our strategies are aligned, the culture is aligned. I think it’s an exit that the shareholders of MainOne are really proud of.”