Some investors are pushing back on the roughly $30 billion valuation British AI cloud company Nscale is seeking for its planned New York listing, Bloomberg reported Sunday. A group of investors told the outlet that a valuation of $16 billion to $19 billion would be more likely to attract buyers.
No decisions have been made, and Nscale has not yet formally started marketing its shares, according to Bloomberg. The company had not publicly responded to the report at the time of publication.
Nscale rents out computing power used to train and run AI models. It filed for its initial public offering in September. Its IPO filing showed $103.4 billion in signed and active contracts at the end of August. Only a small portion of that was already running. Microsoft and Anthropic account for about 85% of the total, Bloomberg has reported.
What valuation could Nscale's New York IPO reach?
The company plans to list on the New York Stock Exchange under the ticker NSCL and raise up to $3 billion. Its last private funding round valued it at about $15 billion. The Telegraph has put the possible listing value at up to $35 billion.
How would Nscale's valuation affect its convertible noteholders?
The valuation also matters to existing backers. In September, Nscale raised $3.36 billion in pre-IPO convertible notes led by Third Point, with another $1 billion from Nvidia still to arrive. Those notes convert into shares at a discount, and the conversion price is capped at a $30 billion valuation.
Why are investors pushing back on Nscale's IPO valuation?
Investors' concerns focus on two areas. The first is delays at Nscale's sites. Its flagship site in Norway is running about six months behind schedule, Bloomberg reported. The second is a weakening appetite for AI infrastructure stocks.
Microsoft has also pulled out of a deal to be the main tenant at Nscale's planned data center in Loughton, Essex. Grid operators do not expect to supply power to the site until the 2030s. Microsoft's exit from Loughton came just weeks before the planned listing.
Nscale is not the only AI infrastructure firm struggling to go public. Earlier this month, Australian data center operator Firmus dropped its IPO after weak investor demand. Shares in CoreWeave, the best-known listed AI cloud company, fell about 25% last week, their worst week since November, according to Bloomberg.
The pushback puts Nscale in a difficult position as it approaches the listing. Investors who have already committed capital will see the conversion terms of their notes tied directly to whatever valuation the company ultimately settles on.
Este artículo fue escrito con la asistencia de IA.
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