• Wednesday, May 22, 2024
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Convergence Partners raise $120m to deepen African trade through technology

Andile Ngcaba

A $120 million fund recently raised by Convergence Partners, a private equity investor focused on the technology sector across sub-Saharan Africa, is to be committed into infrastructure needs that will deepen Africa’s digital ecosystem. This is in turn, to facilitate trade across the continent, by eliminating some of the technology and connectivity-based barriers.

The fund, which is targeting a final size of S$250 million recorded the successful first close of its third fund, the Convergence Partners Digital Infrastructure Fund (CPDIF) which is the $120 million.

The firm, according to a statement, now has more than $400m of capital under management, and is said to be the largest private equity investor dedicated to digital infrastructure in Africa.

“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,” said Andile Ngcaba, chairman of Convergence Partners.

Ngcaba further stated that as the African Continental Free Trade Area (AfCFTA) has commenced, the company believes 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,” he said.

Investors in CPDIF are said to be leading institutions that continue 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, towers etc., as well as 5G, Cloud, Internet of Things (IoT), Artificial Intelligence (AI), fintech and network virtualisation. CPDIF’s first investment is in Ctrack, a transaction that was announced earlier in the year. As a data analytics business servicing the fleet management and insurance industries, the business sits at the intersection of AI and IoT with all its solutions being cloud delivered.

The deployment of this fund, according to the statement, will boost entrepreneurship, innovation, skills development and job creation, though 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 7 percent 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 is required to bring sub-Saharan Africa to acceptable levels of digital access by 2030.

For Brandon Doyle, CEO of Convergence Partners, the company is pleased with the level of support from both repeat and new investors and believe this reflects the company’s track record and the opportunity CPDIF presents at this crucial time in both a tech and African context.

CPDIF is a continuation of the strategy that has been successfully implemented by Convergence Partners since inception in 2006 across its funds under management. In the past 15 years, Convergence Partners has 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.