Teraco Secures $442 Million Loan from Absa for AI-Ready Data Center Expansion

Teraco Data Environments Ltd. has teamed up with Absa Group Ltd. to secure a substantial 8 billion rand ($442 million) loan. The funding will fuel the development of a new state-of-the-art data center, aimed at meeting the skyrocketing demand for artificial intelligence (AI) technologies. This move further solidifies Teraco’s position as Africa’s leading data center operator, with the new facility set to push its total capacity to 228 megawatts.

According to Samuel Erwin, Teraco’s Chief Financial Officer, the company is building this new facility to accommodate the growing needs of power- and heat-intensive AI applications. "The new data center will be designed with hyperscaler specifications and the flexibility to support liquid cooling systems to help manage the demands of AI deployments," Erwin explained in a recent interview.

The loan, which was led by Absa and also involved participation from prominent South African asset managers, is part of Teraco’s broader strategy to expand its infrastructure and meet the burgeoning demand for cloud computing, AI, and other tech services across Africa. This is the second major round of funding the company has secured in recent months, following a successful 11.8 billion rand raise in 2023 to refinance debt and complete another facility set to open in Q1 2025.

Africa, with its rapidly growing, young, and increasingly tech-savvy population, is becoming a hotspot for digital services—from banking to entertainment. Despite holding less than 2% of the world's installed data center capacity, the continent’s demand for digital infrastructure is rising rapidly, with South Africa currently leading the charge. The data center market in Africa is projected to grow to $7 billion in the next three years, creating immense opportunities for investors willing to scale up.

Teraco, which was acquired by Digital Realty Trust Inc. for $3.5 billion in 2022, remains the largest player in Africa’s data center space. However, the competitive landscape is heating up with new entrants like Equinix and Amazon Web Services expanding their operations on the continent. Microsoft, for instance, has already announced plans for a massive 1-gigawatt AI data center project in Kenya in partnership with UAE-based AI company G42.

With this new loan and the continued growth of the African tech market, Teraco is well-positioned to capitalize on the demand for data centers, particularly those designed to support the rapidly advancing field of artificial intelligence.