Nscale, a London-based data center developer backed by Nvidia, is encountering investor resistance to the roughly US$30 billion valuation it is seeking for its planned US initial public offering, according to Bloomberg. Some investors have argued that a valuation between US$16 billion and US$19 billion would be more likely to attract buyers. The company filed for a New York Stock Exchange listing on September 18 and continues to respond to comments from the US Securities and Exchange Commission.
Valuation Pushback and Cooling AI Infrastructure Sentiment
The pushback follows the shelving of Australian AI data center operator Firmus's own IPO amid weak demand. Investors also point to falling AI infrastructure stocks, including a 25% weekly decline in shares of CoreWeave and a 32% two-week drop for Nebius. Higher borrowing costs have added pressure to the broader group, making a more conservative valuation seem more attractive to prospective buyers.
Contracts, Customers, and Operational Delays
According to its IPO filing, Nscale had US$103.4 billion in active and signed total contract value as of August 31. Microsoft and Anthropic account for about 85% of that total, with Anthropic agreements providing for payments of up to approximately US$44.6 billion. Only a small share of that contract value was already running at the time of the filing.
Operational challenges have added to investor caution. Microsoft, one of Nscale's largest customers, pulled out of a deal to be the main tenant at a planned data center in Loughton, Essex, after grid operators said power would not be available until the 2030s. Bloomberg also reported that construction at Nscale's flagship Norway facility is running about six months behind schedule.
Pre-IPO Funding and Financial Snapshot
In September, Nscale raised US$3.36 billion in pre-IPO convertible notes led by Third Point, with Nvidia, Apollo, Citadel, Hudson Bay Capital, and Abu Dhabi Investment Council among the investors. Nvidia still has US$1 billion to arrive under the arrangement, and the notes convert into shares at a discount with the conversion price capped at a US$30 billion valuation. That structure directly links investor returns to the final IPO pricing.
For the six months ended June 30, Nscale reported revenue of US$140.6 million and a net loss of US$1.02 billion. The company also said it has identified material weaknesses in its internal control over financial reporting. These figures illustrate both rapid growth and the substantial costs associated with scaling AI infrastructure.
Listing Plans and Outlook
Nscale plans to list on the New York Stock Exchange under the ticker NSCL and aims to raise up to US$3 billion, with Goldman Sachs, J.P. Morgan, and Morgan Stanley serving as lead bookrunners. No decisions on pricing have been made, and the company has not formally started marketing its shares. Formal marketing remains on hold while Nscale works through regulatory feedback on its filing.
Nscale enters a challenging market for AI infrastructure listings, with investor appetite tempered by delays, customer changes, and falling peer valuations. Its ability to secure a valuation near US$30 billion may depend on proving that its contracted revenue can translate into operating capacity and investor confidence. For now, the company must navigate regulatory review and shifting sentiment before any public debut.
Source: Bloomberg