CtrlS Datacenters Pvt. Ltd will have to meet a series of execution milestones—including retaining Amazon as a customer at one project and securing power and customers for another—or risk handing Canada Pension Plan Investment Board (CPP Investments) a larger stake in the company.
If the privately held Hyderabad-based data centre operator fails to meet the agreed conditions, CPP Investments’ ownership could increase to 10.3% from the current 8.2%, effectively providing downside protection for its ₹4,000 crore investment, according to two analysts.
On 17 June, CPP Investments announced that it had ($4.8 billion)—almost double the company’s internal valuation of $2.6 billion in November last year, Mint reported.
A detailed set of questions emailed to CtrlS did not receive responses until press time.
Hidden safeguard
CtrlS has two planned data centres in Hyderabad and Mumbai.
For the Hyderabad facility, the company must obtain electricity from Telangana’s transmission utility and ensure that Amazon remains a customer. For the planned 300MW (megawatt) Mumbai data centre, CtrlS must secure power connectivity as well as anchor customers.
CtrlS does not disclose the identities of its customers. However, its filings show that its largest customer accounted for about 43% of revenue in FY25, underscoring the importance of retaining key clients. Mint could not independently verify whether Amazon is that customer.
The deadline for achieving both milestones is February 2027, six months after completion of the agreements with CPP Investments.
“If…the Company (CtrlS) has not satisfied either the Pharma City Condition or the Mumbai Condition … then the process laid out under Clause 4 of the inter-se agreement dated June 6, 2026 executed between Tier IV Datacenters LLP, Candid DC Services Limited and CPPIB India Private Holdings Inc. will apply,” read a resolution approved by the Board of CtrlS, dated 10 June.
The resolution further states:
“[T]he CCPS (compulsory convertible preference shares) shall convert into fully paid-up Ordinary Shares of the Company basis a conversion ratio of: (i) 1:1.262992, in case buy-back is the opted Purchase Method in terms of Clause 4.2 (a) of the Inter-se Agreement.”
Put simply, the compulsory convertible preference shares (CCPS) are ordinarily converted into equity at a 1:1 ratio. However, if CtrlS fails to meet the agreed milestones at both projects, the conversion ratio changes to 1:1.262992, giving CPP Investments nearly 26% more shares for the same investment and raising its ownership to about 10.3%.
“Investors seek safeguards against delays or unmet business targets. Growth capital follows the right metrices and some times structures help build the expectation gap between investors and managements expectations,” said Bharat Kedia, chief operating officer for private equity at brokerage firm Motilal Oswal Financial Services.
Execution risks
CPP Investments’ agreement with CtrlS underscores investor optimism about India’s fast-growing data centre market—but also highlights concerns over execution risks.
Since August last year, domestic and global companies have announced nearly $300 billion in planned investments in . Standalone operators such as Airtel-backed Nxtra, Hiranandani-backed and CtrlS are also investing heavily to expand capacity.
“History will not measure this phase by the billions India announced. It will measure it by the megawatts that were actually built, powered and trusted. Private investors will always treat government approval as a core risk in data centres, because the asset only earns once it is built, powered and monetized,” said Sanchit Vir Gogia, founder and chief executive of independent technology consultancy Greyhound Research.
Gogia added that the clause in the CPP-CtrlS deal “is not an investor doubting the operator—it is an investor pricing the government.”
“The most important counterparty in the deal is the one that never signs the term sheet,” said Gogia.
Land acquisition, electricity availability and regulatory approvals continue to raise questions about India’s ability to support the massive pipeline of announced data centre investments.
A 28 May report by industry body Assocham, prepared in partnership with consultancy PwC India, noted that India’s operational data centre capacity had nearly tripled since 2020 to around 1.5GW (gigawatt) by the first half of this year, and is projected to reach 6.5GW by 2030.
“However, continued growth is accompanied by persistent difficulties with power, land, connectivity, human resources and regulation. These challenges will impede future growth unless overcome by integrated efforts of policy and industry,” the report said.
Business performance
According to filings with the ministry of corporate affairs, CtrlS’ operating revenue rose 16.6% to ₹1,561.8 crore in FY25 from ₹1,339 crore a year earlier.
Net profit was largely unchanged at ₹248.1 crore, compared with ₹247.7 crore in FY24.
According to Mint‘s interview with on 17 June, the Pinnapureddy family owns 91% of CtrlS, while CPP Investments currently holds 8.2%. The remaining 0.8% is owned by friends-and-family investors, including Zerodha co-founder Nikhil Kamath.
Pinnapureddy also said CtrlS currently operates 370MW of active data centre capacity in India, a sharp increase from the 130MW reported by rating agency Icra in an analyst note last August.