A wide disconnect between public and private valuations—combined with high leverage levels—has created a “conundrum” that is preventing privately held data center operators from pursuing initial public offerings, investment banker Jennifer Fritzsche said during a panel at the PTC ’26 conference.

Fritzsche, a managing director in digital investment banking at Greenhill, a subsidiary of Mizuho, said operators that might otherwise be ready to access public markets are instead stalling as they grapple with capital structures that public investors won’t accept.

She spoke on a panel titled “Global Data Center Investing: Scaling For the AI Era” on January 18. Founded in 1978, PTC is a non-profit membership organization committed to advancing digital infrastructure, telecommunications, and information and communications technology.

Fritzsche added that public real estate investors—who dominate the REIT-heavy data center equity universe—have been explicit that companies with more than 8x leverage should “not come” to market.

“It is a conundrum,” she said, noting that private data center platforms routinely run materially higher leverage because they must “spend ahead of the customers” to secure AI-ready infrastructure. She added that an IPO could effectively force an operator to use proceeds to pay down debt, leaving it with less ability to fund the enormous development pipelines now required to meet cloud and AI demand.

At the same time, Fritsche said the public equity markets are not rewarding the sector the way private buyers are. Public comps are trading in the high teens on 2025 EBITDA, she said, while recent private transactions—such as the sales of Aligned Data Centers and AirTrunk—have closed at least 10 turns higher, implying high-20s multiples or more.

“There is a huge disparity between the private market deals and the public ones right now,” she said, adding that the tower sector is seeing a similar dynamic.

That valuation gap effectively blocks the IPO window for operators backed by infrastructure funds or private equity sponsors looking for premium exits.

Expectations were high that Aligned and Switch might pursue IPOs in 2025, but instead Aligned was acquired in a private transaction by a consortium including MGX, BlackRock, Microsoft and NVIDIA. The deal underscored the depth of private capital available—and the reluctance to accept public-market pricing that would imply a far lower valuation.

Fritszche said a path forward may be an “education campaign” aimed at public investors, explaining why high leverage is not a sign of distress but a prerequisite for meeting hyperscale demand. Without access to large amounts of debt, operators cannot build the GPU-dense, high-capacity campuses the market requires.

Even so, an IPO window could open when the time is right and once more assets stabilize, said Sarah Kanes, head of data center investment banking at Wells Fargo.

She pointed to Equinix as a publicly traded data center company that has continued to make investments by savvily managing its debt profile by using JVs and off-balance sheet funding.

*This story was originally published exclusively for NPM subscribers.