MainOne CEO Funke Opeke says Equinix is buying her company for the right price – TechCrunch

The African tech scene awakened right this moment to thrilling information in regards to the landmark acquisition of MainOne, one of many area’s most vital and pivotal tech corporations previously decade, by Equinix, a U.S. multinational specializing in web connection information facilities.

The story of MainOne begins with founder and CEO Funke Opeke transferring again to Nigeria after working as an government at Verizon. When she observed how poor web connectivity was in Nigeria, she began Mainstreet Applied sciences, the corporate behind the event of the MainOne Cable, to supply community options to companies in Nigeria and West Africa in 2008.

MainOne went stay in 2010 as West Africa’s first privately owned, open entry, undersea high-capacity 7,000-km cable stretching from Portugal to West Africa with landings alongside Accra, Dakar, Abidjan and Lagos.

The corporate, which providers companies in additional than 10 African international locations, is now an Equinix subsidiary and the acquisition, topic to regulatory approval, is pegged at $320 million. When accomplished, it’s going to turn into the most important acquisition of a tech firm in Nigeria and the primary landmark deal made by an African lady tech CEO.

TechCrunch had a chat with Opeke and Judith Gardiner, VP Development and Rising Markets at Equinix, to debate the deal and handle stories that MainOne was purchased for reasonable.

TechCrunch: For those who’ve been following the reactions to the information this morning, there are two camps with opinions on the deal. Some suppose Equinix acquired MainOne at a superb value after you ran the corporate profitably, whereas others suppose MainOne was underpriced. There are stories that MainOne has invested as much as $400 million in the middle of constructing web and information infrastructure in West Africa. Do you see why part of the general public is conflicted about MainOne is promoting at $320 million?

Funke Opeke: Fascinating query. First, I believe Equinix is gaining a aggressive, knowledgeable value for the shares in MainOne and the shareholders retained a number one funding financial institution to run a aggressive course of. And we’re very glad and happy with the provide made by Equinix and the worth they represented to the shareholders and to the enterprise going ahead. However they weren’t the one get together.

Now, after all, we’ve raised capital by means of the years, however not all of the capital we’ve raised is fairness. The truth is, MainOne has not raised fairness for the reason that preliminary founding of the corporate. We now have raised debt, we’ve refinanced debt, we’ve prolonged that debt to develop the enterprise. So while you have a look at the sale of shares in MainOne and the worth, one, you shouldn’t say “OK, as a result of MainOne has raised this a lot capital over time, then we’ve to multiply that by a specific amount to attain the worth of the enterprise.”

The opposite factor, after all, is it’s a must to have a look at the income and income generated [by] the enterprise, earnings multiples of the enterprise, and I can guarantee you that the shareholders of MainOne who’re promoting their shares are seasoned buyers. And I believe they are happy with the degrees of returns that they’re reaching.

Would you want to focus on the share of fairness and debt you’ve raised all through the years only for clarification’s sake?

FO: I don’t have these numbers in entrance of me, and we’ve raised a number of rounds of debt or rolled over a number of rounds of debt. The corporate to the general public area was initially capitalized with $120 million in fairness and $120 million in debt. You must also observe that the buyers in MainOne began investing in 2008, and, clearly, there have been partial distributions to those buyers by means of the tenor of the enterprise.

OK. So that you’re saying this wasn’t any pressured or distressed sale?

FO: Under no circumstances. I imply, we’re doing effectively, we’re having certainly one of our greatest years ever. Our companies rising, responding to the challenges confronted in our area. We opened a brand new information middle in Ghana in June of this yr, we’re increasing our information middle facility in Lekki and that shall be open in Q1 2022.

Funke Opeke at TC Startup Battlefield Africa

We’re crucial to the digital infrastructure of West Africa, little question, and we anticipate that we’ll proceed to develop that as a part of the worldwide platform that Equinix brings. It’s a incredible story that we will develop as a part of that international platform and have entry to further funding functionality, the know-how and the options they’ve to supply the worldwide clients who’re more and more eager to do enterprise in our area.

However that is no form of misery sale. Our shareholders who’re monetary buyers have been within the firm from the preliminary buyers virtually 13 years round 2008 to all the opposite institutional buyers who got here in in 2009. And you’ll agree with me, however that’s an intensive interval. However these are additionally infrastructure buyers who understand that it takes time for the infrastructure to mature and turn into productive. They’ve seen their funding turn into productive for them lately and this was a superb time to exit they usually couldn’t hand it off to a greater firm than Equinix. Our methods are aligned, the tradition is aligned. I believe it’s an exit that the shareholders of MainOne are actually pleased with.

Judith Gardiner: And I might add to Funke’s level that once we are taking a look at potential targets to purchase, we actually put an terrible lot of effort into the evaluation of the administration workforce, the property, the technique that the corporate has to make it possible for it’s going to suit with ours and in addition plug into our platform.

And for us, MainOne was unquestionably, the perfect match for us in the marketplace. And I believe the opposite factor is that we see the connectivity, the cable Funke began a few years in the past from Lagos to Portugal, as a key differentiator. And we’re additionally actually inspired by the quantity of land that MainOne has for growth, which is extremely essential to have the ability to develop out there and lengthen our platform.

Speaking about Equinix and your plans for Africa, we see different international gamers reminiscent of just lately Fb and Google doing stuff with their 2Africa and Equiano subsea cables. Do you see any risk to the work you’ve carried out at MainOne?

FO: Under no circumstances. One of many research Google did on the influence of their submarine cables that that they had inbuilt different elements of the world is definitely once they begin constructing in a area, they really purchase greater than they’re in a position to present themselves. So we see the doorway of worldwide platforms and different gamers with their very own direct investments into our market not an indication of competitors however as an indication of the rising dimension and significance of our market and the necessity for higher participation by these gamers.

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From the within of the enterprise, these corporations should not constructing sufficient infrastructure for them to not want to purchase from others, to not want to increase the providers to totally different places, and never want range from their networks. So sure, there may be extra curiosity in our market as a result of our market has turn into extra vital. Sure, a number of the pursuits and the investments will compete with us. However I believe it might additionally largely speed up the expansion of our market. Meaning an even bigger enterprise alternative or addressable marketplace for MainOne.

How does Equinix see competitors taking part in out with massive information facilities, reminiscent of Amazon in South Africa and Africa Knowledge Centres?

JG: Amazon is certainly one of our largest clients. Amazon builds its personal information facilities, which are usually for its personal use. However Amazon additionally takes very massive area with Equinix around the globe for cloud on-ramps for his or her compute, and actually for any information that should circulate around the globe, they may have a tendency to make use of an Equinix or a colocation firm. So, sure, they’ve their very own information facilities in South Africa. However, I might anticipate that we’re going to see the worldwide gamers coming into MainOne now that we’re extending our Equinix platform.

How does this acquisition carry extra enterprise into Nigeria and Africa markets?

FO: Simply as an extension of what Judith stated, international gamers are more and more all in favour of Africa as a result of we’re on the digital map. Now we’ve extra customers on the web, their consumption of digital providers and functions is rising. However how a lot of that worth chain is being offered from inside Africa, and Equinix is coming into Africa to assist us deepen the investments to host cloud service suppliers and enterprises right here who need to be part of this international material to allow international enterprise.

That clearly in and of itself is a development technique that permits us to seize extra market share and supply providers as corporations proceed to digitize, as extra customers proceed to get entry to broadband providers. It allows us to supply extra of what they want, which is a development technique.

And it additionally allows the worldwide service suppliers as they search to achieve extra of the African inhabitants to leverage the platforms we’ve throughout the area, which we shall be rising, together with constructing out the info middle in Sagamu, which is extra funding, extra enterprise, extra jobs in Africa to serve the wants of the African digital inhabitants and for the remainder of the world that desires to interact with Africa.

JG: Our acquisitions are usually demand-driven by our clients, our worldwide clients. And that is very a lot a type of the place our clients have been saying to us for fairly a while, ‘When do you need to go to West Africa, we actually want you to go there as a result of we need to lengthen our personal companies there and we need to do this in your platform.’ And that’s the reason that this is likely one of the highest worth tech IT business acquisitions this yr in West Africa, as a result of it was actually a necessary a part of our new market technique.

I wouldn’t say simply West Africa, it’s in all probability the entire of Africa. I’m undecided there’s any larger acquisition made this yr. The truth is, it’s one of many uncommon exits to have occurred on the continent and the primary main one from a feminine founder. How does it really feel to be in each unique golf equipment of founders which have exited their corporations in Africa?

FO: Properly, I’m delighted. It’s been a Herculean effort, however not simply of myself, however the entire workforce, my shareholders, the buyers who wrote the test, who offered the governance, the setting, the market, the shoppers who’ve embraced the providers we’ve and have walked with us by means of the years. And I’m additionally gratified that our exit is coming in type of entry to a world chief strategic in our area that’s coming to the continent for the primary time to take a position and assist us develop the enterprise. And we’ll be sure that there’s good alignment in order that the corporate, the workforce, the investments, the shopper base, the product units can all proceed to develop. 

However as a feminine founder, I hope that to different feminine founders and to younger girls who’re contemplating careers in tech or beginning a enterprise, this demonstrates to them that [making an exit] is certainly achievable. It’s a good instance for them and it’s a superb motivator. So to that extent, I believe being a feminine founder has significance. However I believe by way of the enterprise, you recognize, it’s not gender-specific. And I believe it’s simply an incredible exit of an incredible firm that lots of people have labored at to make profitable. And I believe, actually, to the credit score of Equinix that they’ve recognized by they usually’ve chosen to take the daring step and are available into the continent with us. And we stay up for the continued development of digital infrastructure in Africa because of this.