Nscale announced $3.36bn in pre-IPO convertible loan-note financing led by Third Point on 25 September, including an initial $2.36bn tranche at closing and a further $1bn commitment from Nvidia, according to its financing announcement.
Key points
- Nscale says the notes will convert automatically when it completes an IPO.
- Nvidia’s commitment is expected to be funded in mid-November 2026.
- Funds managed by Apollo and Abu Dhabi Investment Council are among the investors Nscale named.
- Nscale says it has more than $103bn in total contracted value.
Loan notes convert when Nscale completes its IPO
Nscale says the loan notes will convert automatically into shares on completion of its initial public offering. Other investors would receive ordinary shares, while Nvidia would receive non-voting shares. The share conversion is tied to completion of the listing rather than a date set for the financing.
AI Affairs reported on Nscale’s IPO plans on 22 September, when the company was targeting a $30 billion valuation after revenue rose 1,252%. The convertible financing gives investors a route to shares in that proposed listing under the terms Nscale has announced.
Nscale describes the loan-note financing and the expected closing of its tranches as forward-looking matters. Its announcement warns that actual outcomes could differ materially from current expectations. The company also says the notes and any securities issued on conversion have not been registered under the Securities Act of 1933 or state securities laws.
Under the terms stated in the announcement, those securities may not be offered or sold in the United States without registration or an applicable exemption. Nscale includes its intended use of the proceeds among the forward-looking matters covered by its warning.
Third Point leads a wider investor group
Third Point led the financing, Nscale says. Alongside Nvidia, the company named funds managed by Apollo, Citadel, Hudson Bay Capital, Abu Dhabi Investment Council and 8090 Industries as new or existing investors supporting the round. The announced structure places the initial funding and Nvidia’s later commitment within the same convertible financing.
Nscale also listed Davidson Kempner Capital Management, Qube Research & Technologies, Context Capital Management, Longaeva Partners L.P., Wellington Management, Castleknight, Ghisallo Capital Management, LionTree Investment Fund, L.P., Javelin Venture Partners and Irving Investors among participants. Goldman Sachs & Co. LLC acted as placement agent for the capital raise, according to Nscale.
Those investors are backing a company that sells AI cloud capacity to hyperscalers, developers of frontier models, AI-focused companies and enterprises, according to Nscale’s description of its business. Its proposed IPO is also the event that would change the investors’ loan notes into shares.
Nscale targets data centres and GPU clusters
Nscale says the financing will support expansion of its AI cloud platform. The planned work spans power plants located behind the meter, liquid-cooled AI data centres and large GPU clusters. The company describes its offering as bringing together software, computing capacity and power for AI training and inference.
The company puts its total contracted value at more than $103bn. Nscale presents that figure alongside its plan to expand infrastructure for customers running and developing AI systems. Josh Payne, its founder and chief executive, said the investor backing would help the company accelerate data centre construction globally.
Nscale describes the financing as support for an integrated platform, from the electricity supply and cooling used by data centres to the GPU clusters and cloud software offered to customers. Its stated use of the capital covers expansion across that chain, while its forward-looking warning applies to the intended spending.
Nvidia is expected to fund its additional $1bn commitment in mid-November 2026, Nscale said.
