Data Center Sector Thesis: Validating a PE Portfolio Acquisition
Built a sector thesis benchmarking cap rates and per-unit pricing to evaluate a data center portfolio deal
Nalin Mundeja
Advisory Committee Member at The Collegiate Entrepreneurs' Organisation, Delhi University
Overview
Nalin was asked to evaluate whether a data center portfolio being offered to a private equity client was fairly priced. The brief was quantitative at its core: was the deal price justified relative to what the market was trading at?
The Story
Nalin was asked to evaluate whether a data center portfolio being offered to a private equity client was fairly priced. The brief was quantitative at its core: was the deal price justified relative to what the market was trading at?
He structured the analysis around two key metrics: cap rates and dollar-per-kilowatt pricing, the primary benchmarks used to value data center assets. He pulled secondary research from industry reports and top research firms, and supplemented that with conversations with managers at his firm who had direct deal experience in the sector.
The analysis went deep across multiple dimensions. He benchmarked cap rates and per-unit prices across different geographies, including the North Virginia corridor where data center activity was concentrated, and across different asset types including build-to-suit, turnkey, and shell configurations.
The output was a detailed Excel model with a summary deck. His findings showed that the deal price was significantly below prevailing market rates, making it an attractive acquisition. The client reviewed the analysis and moved forward with the deal.