Nscale faces investor resistance to the valuation of about $30 billion it seeks for its planned US IPO, with some prospective buyers favouring US$16 billion to US$19 billion, Bloomberg reported on 19 October.
Key points
- Some prospective investors say a US$16 billion to US$19 billion valuation would be more likely to attract buyers.
- Nscale has not begun formal IPO marketing, although the required 15-day waiting period has elapsed.
- The company raised US$3.36 billion in pre-IPO financing in September.
- Nscale said on 18 October that Microsoft had withdrawn from a UK data centre deal after the site encountered delays tied to power constraints.
Investors press for US$16 billion to US$19 billion
The lower range has been urged by a cohort of investors who believe it would be more likely to find buyers, according to people familiar with the discussions. They cited the collapse of Australian AI data centre company Firmus’s IPO plan among the factors behind their view.
The talks remain open, and the terms of Nscale’s offering could change, the people said. The company has made no final decision on the IPO plan.
Other listed AI infrastructure companies have come under pressure. CoreWeave lost a quarter of its market value in the week beginning 12 October as a measure of its credit risk reached an all-time high. Nebius Group’s shares fell 32 per cent over the two weeks preceding 19 October.
Borrowing costs have risen while uncertainty over AI’s longer-term returns has grown. Those conditions have weighed on sentiment towards infrastructure businesses including chipmakers and cloud computing companies.
Nscale works through SEC filing comments
Nscale made its US listing filing public on 18 September. It has not begun formal marketing, although the required 15-day waiting period has passed. People familiar with the matter said the company intends to start marketing once it has resolved comments from the US Securities and Exchange Commission on the filing.
The London-based developer raised US$3.36 billion in a pre-IPO financing round in September led by Dan Loeb’s Third Point. Nvidia, Apollo Global Management, Citadel, Hudson Bay Capital and Abu Dhabi Investment Council were among the investors. AI Affairs reported the financing round.
Nscale had been expected to raise as much as US$3 billion in its IPO, Bloomberg reported in August. That proposed offering would follow the September financing round rather than replace it.
The company has also described a multi-year agreement to provide computing resources to humanoid robotics developer Figure. Under the arrangement, Nscale would commit at least $3.5 billion and up to $6 billion to support Figure’s AI models and robots, PYMNTS reported.
Microsoft exits as Norway project runs late
Nscale said on 18 October that Microsoft, an investor and customer, had withdrawn from the Essex data centre deal covered by AI Affairs. The site had encountered delays linked to power constraints. It comes while Nscale is seeking a valuation that some prospective IPO buyers have challenged.
Nscale is also developing facilities in Norway and West Virginia. Construction at its Norway site, just north of the Arctic Circle, is six months behind schedule, Bloomberg reported. Leaks in the cooling system, local regulations, construction delays and a fire have set back the project.
