A private equity investor focused on the technology sector in sub-Saharan Africa (SSA), Convergence Partners, has said that the first close of its third fund, the Convergence Partners Digital Infrastructure Fund (CPDIF), has closed with US$120 million.
The fund is targeting a final size of US$250 million.
But with more than US$400m of capital under management, Convergence Partners remains the largest private equity investor dedicated to digital infrastructure in Africa.
The company said in a statement that investors in the CPDIF were leading institutions that continued to support African growth such as the CDC Group (the UK’s development finance institution), the United States International Development Finance Corporation (DFC), the European Investment Bank (EIB), the International Finance Corporation (IFC) and Proparco (the private sector arm of the Agence Française de Développement - AFD Group).
“CPDIF investments will be driven by the infrastructure needs of the emerging growth themes in the digital infrastructure ecosystem, specifically fibre, wireless, data centres and towers, among others as well as fifth generation (5G), Cloud, Internet of Things (IoT), Artificial Intelligence (AI), financial technology (fintech) and network virtualisation. CPDIF’s first investment is in Ctrack, a transaction that was announced earlier in the year,” the statement said.
It explained that as a data analytics business servicing the fleet management and insurance industries, Ctrack sat at the intersection of AI and IoT with all its solutions being cloud-delivered.
It added that the fund also had a strong and measurable impact objective and, via its participation in the build-out of Africa’s digital infrastructure, it would boost entrepreneurship, innovation, skills development and job creation while massively boosting access to the Internet and all the critical digital tools it offers.
“Africa remains, by far the most underserved region in terms of broadband and digital technology access. Despite the advances in the rollout of digital infrastructure on the continent, fixed broadband penetration in sub-Saharan Africa still lags far behind at about seven per cent of the population. There is a massive investment opportunity that still exists to address digital inclusion with the World Bank estimating that more than US$100 billion of capital was required to bring SSA to acceptable levels of digital access by 2030,” it said.
The Chief Executive Officer of Convergence Partners, Mr Brandon Doyle, said his outfit was delighted to have achieved this milestone, particularly given the headwinds in African private equity fundraising generally, and the impact of the COVID-19 pandemic on business activity, over the past 12 months.
“We are very pleased with the level of support from both repeat and new investors and believe this reflects our solid track record and the opportunity CPDIF presents at this crucial time in both a tech and African context,” Mr Doyle said.
The statements aid CPDIF was a continuation of the strategy that had been successfully implemented by Convergence Partners since inception in 2006 across its funds under management.
It said in the past 15 years, Convergence Partners had invested in submarine cable systems, geostationary satellites, terrestrial long-haul, metro and access fibre, wireless networks, data centres, as well as service provision delivered by these networks such as enterprise connectivity, SD-WAN, fintech & healthtech solutions, data switching and more.
The Chairman of Convergence Partners, Mr Andile Ngcaba, said “in the past 20 years, we have witnessed the exponential growth of internet penetration on the African continent.
Internet penetration in sub-Saharan Africa alone has grown tenfold, compared to the threefold increase the rest of the world has seen. As Convergence Partners, we pride ourselves on contributing to this growth through our numerous communication infrastructure investments across the Continent.
However, the COVID-19 pandemic has shown us that there is still much work to drive digital inclusion. Today, Africa is experiencing the highest growth in international internet bandwidth compared to any other region in the world. As we embark on this journey as CPDIF, the next twelve years will be spent continuing to build on our original vision of ubiquitous pan-African communications.
As the African Continental Free Trade Area (AfCFTA) commences in the same year, we embark on the next step of our journey as Convergence Partners. We believe that
AfCFTA will benefit immensely from the availability of digital infrastructure. Our greatest strength is our knowledge of technology, investments, and deep understanding of the African market and cultures.”
About Convergence Partners
Convergence Partners was founded in 2006 and invests as value-adding partners into private equity and infrastructure opportunities in technology and digital sectors across sub-Saharan Africa.
It has an asset base in excess of $400 million which it deploys across Southern, East and West Africa through three funds – Convergence Partners Investments, Convergence Partners Communications Infrastructure Fund and the recently launched Convergence Partners Digital Infrastructure Fund.
With its strong sector focus and primary strategy of growth stage investing, Convergence Partners brings its deep skills, relationships, experience and capital to actively grow its investments, including catalysing new investment opportunities both directly and via its portfolio companies.
Convergence Partners has played a leading role in several landmark African digital infrastructure investments that have changed the paradigm in the availability, quality and affordability of digital services on the Continent.
Intrinsic to Convergence Partners is generating and sustaining superior returns on investment while maximising positive impact and accelerating digital inclusion through its focus on infrastructure development in Africa.
Convergence Partners was awarded the Best TMT Impact Investment Strategy for Africa 2020 by CFI.co.