Challenge

The South Korean corporate giant was lured into the immense potential of the Vietnam data center market, which was still in a nascent stage. Yet, the Client was not sure of the key metrics and dynamics of this market, notably the hyperscale segment, and wanted to have an overview. More importantly, the Client wished to be assisted in conducting a pre-feasibility study (FS) for an intended investment project to be based in Hanoi. Per Client’s specific request, the pre-FS needed to focus on CAPEX and key investment efficiency parameters.  Given the hypothesis of massive CAPEX, it was very likely that the contemplated investment project could be financially inefficient in terms of IRR and payback period. We were supposed to check and confirm it. This was quite a challenge given the fact that hyperscale-focused data center was still non-existent at the time (and is still now).

Engagement Outcome

Based on both primary and secondary researches, we provided the Client with an insightful market overview.  As far as the pre-FS is concerned, to best serve the Client, we conducted in-depth interviews with the few players who are involved in the hyperscale segment for practical perspectives. We also talked with top- brand suppliers of relevant hardware, potential landlords of industrial land lots and prospective supplier of electricity (both conventional and re-generative power) for the intended investment project and had them provide as detailed as possible quotations on the basis of lacked technical drawings.  Based on those valuable inputs, we calculated CAPEX fairly close – which was essential for the fair determination of key investment metrics such as IRR and payback period, the most important deliverables for the Client in this engagement.  Aside from the metrics, we also came up with relevant critical advice with regard to investing decisions (investment sizes, alternative investment scheme, and their possible outcomes).

Economic and Social Impacts

The engagement helped Client avoid making hasty investment decisions (without conducting market research and pre-feasibility or feasibility study) that might result in terrible outcomes. This helps prevent losses for the society at large. The assignment also assisted by providing investment options or alternative investment approach that might be more productive or profitable eventually.

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