Nscale Raises $3.36 Billion in Pre-IPO Round Led by Third Point

Nscale, a developer of artificial intelligence data centers that counts Nvidia Corp. and Microsoft Corp. among its partners, raised $3.36 billion in a pre-IPO financing round as the company raises to go public.

The London-based firm’s convertible loan note offering was led by Third Point with investors including Nvidia, Apollo, Citadel, Hudson Bay Capital, Abu Dhabi Investment Council, and 8090 Industries participating, according to a statement Friday confirming a Bloomberg News report. The completion of the deal comes a week after the company filed for an initial public offering, which may raise as much as $3 billion, people familiar with the matter have said.

The financing includes a $2.36 billion tranche and an additional $1 billion commitment from Nvidia with funding expected in mid-November, the filing shows. The notes are convertible into ordinary shares — or non-voting shares for Nvidia — upon completion of an IPO.

Spun off from a cryptocurrency mining operation in early 2024, Nscale quickly became one of the most prominent data center newcomers powering the AI boom as a so-called neocloud operator, renting out computing resources to companies developing AI.

Goldman Sachs Group Inc. acted as placement agent for Nscale in connection with the deal. Some details of the offering were disclosed in the company’s IPO filing.

The offering was expected to be priced at the equivalent of the IPO price minus a double-digit percentage point discount, people familiar with the matter have said. The discount will be adjusted up to a $30 billion valuation, above which the conversion price remains the same, they said.

Nscale’s board includes former Meta Platforms Inc. executives Sheryl Sandberg and Nick Clegg, who previously served as the UK’s deputy prime minister.

Goldman Sachs, JPMorgan Chase & Co. and Morgan Stanley are leading the IPO, with 19 other banks working on the planned IPO. The shares are expected to trade on the New York Stock Exchange under the symbol NSCL.