Andile Ngcaba’s Convergence Partners has increased its stake in African broadband infrastructure business CSquared, buying shares previously held by Google.
Ngcaba’s firm at the same time took part in a R1.2bn capital raise to finance CSquared’s expansion.
Founded by Ngcaba, who serves as chair, Convergence Partners specialises in digital infrastructure investments, having raised $296m (R5.53bn) for its third fund in January. This was been earmarked for opportunities across Sub-Saharan Africa.
In total, the firm has more than $600m under management
On Tuesday, CSquared announced a fresh equity investment from both new and existing shareholders to finance its growth plan. The company has raised $25m in new equity from Convergence Partners Development Infrastructure Fund (CPDIF), the International Finance Corporation (IFC) and the International Development Association’s Private Sector Window Blended Finance Facility.
This is the first tranche in a broader $65m investment programme to finance the infrastructure company’s expansion and growth.
Convergence Partners has also acquired the stake in CSquared held by Google.
CSquared was initially launched as a project within Google in 2011, with the aim of building metropolitan fibreoptic networks in Sub-Saharan Africa. The company is carrier-neutral and operates, like a number of other fibre network operators, on a shared infrastructure model.
“The long-term vision for the company is to increase internet penetration in Sub-Saharan Africa and to reduce internet access costs by investing in infrastructure necessary to drive digital transformation in the region,” says CSquared.
The new investment will be used for network expansion as the company continues to drive infrastructure developments across its current markets — Uganda, Ghana, Liberia, Kenya, Democratic Republic of Congo and Togo — as well as expanding into new markets.
CSquared was opened up to external investment in October 2017, bringing in investors like Mitsui & Co as well as Convergence Partners and the IFC to help commercialise the company.
In is said that CSquared’s collaboration with Google in Togo was key to delivering the first continental landing of the Equiano undersea cable in Africa in March 2022.
“The opportunity to increase our investment in CSquared via our most recently raised fund comes at a pivotal time for African digital development,” Ngcaba said in a statement.
“The benefits of world-class connectivity span all layers of society and have never been more tangible. As investors in the company since 2017, we have had a front-row view of the tremendous impact of open-access networks on the development of the African ICT ecosystem.
“The combination of developmental impact, as well as strong commercial returns, makes this an attractive investment for CPDIF and we are delighted to be able to shape the next phase of this journey”.
Ngcaba and his team have been busy in recent years allocating capital to a number of projects.
Convergence Partners in April announced that it had invested $10m into 42 Markets Group, an incubator, investor and builder of fintech companies.
Technology company e4 provides custom solutions and services, including software development and business automation. With a focus on software as a service, e4 uses its technology expertise to help change and improve customer processes.
In June, the firm backed Yellow, a provider of pay-as-you-go finance for off-grid solar home systems and connectivity solutions for low-income consumers in parts of East Africa.
Ngcaba’s Convergence Partners Investments was recently rebranded to Solcon Capital and spun out of the group as it aims to strengthen its deep tech portfolio.
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