The client, a European infrastructure investor, was looking to expand their investment portfolio towards mission-critical digital infrastructure by targeting a regional data center operator. The data center portfolio in question was distributed across approximately 10 countries and focused on colocation products and adjacent managed services for the mid-market & enterprise segments.
Given a truly diverse set of data center facilities, Solon needed to dissolve multiple layers of complexity to reach a bottom-up assessment approach to produce an aggregated portfolio business plan going forward.
The commercial due diligence involved elements of a market and competitive review, analysis of operational data as well as business plan assumptions, and assessment on a per-driver level.
Data centers and, more specifically, colocation markets are heavily localized and vary greatly on a city-by-city basis, both in terms of demand and supply restrictions. This is further differentiated for different customer & G2M segments they serve, such as retail, wholesale, or hyperscale demand. To adequately capture this complexity, Altman Solon chose a bottom-up market sizing method that paired city-level demand and supply indicators with GIS analysis to estimate regional demand levels within driving distance. Supplemented by extensive interviews with market participants and brokers, the demand, supply, and pricing situation was joined together giving an in-depth view of current oversupply or shortages driving short and mid-term developments.
The aggregated business plan for the data center portfolio was consecutively tested on the local market level regarding the fit of driver developments with local demand and supply expectations.
Altman Solon assessed future bookings through a win-rate analysis including fair-share methodology on a city level. This was supplemented by benchmarks and industry best practices for leading digital infrastructure providers.
Building on rigorously local and facility-specific analysis, Altman Solon provided a consistent assessment approach. Deriving the overall growth trajectory through bottom-up, driver-based mechanics ensured resilience and led to clear evaluation and classification of the business plan thinking for the capital markets.