Nscale Targets $3.5B Pre-IPO Boost from Nvidia, Third Point Amid

London-based AI cloud infrastructure firm Nscale is in advanced discussions to secure up to $3.5 billion in pre-IPO financing, with significant commitments anticipated from tech giant Nvidia and hedge fund Third Point. The two-year-old company, rapidly emerging as a central player in Europe's AI build-out, is simultaneously reporting a monumental increase in its contract book, now valued at an estimated $103 billion, nearly doubling the figure from just a month ago.

The proposed funding round includes approximately $1.5 billion in convertible notes, expected to be led by Daniel Loeb's Third Point. Additionally, Nvidia is slated to contribute around $2 billion. Investment banking powerhouse Goldman Sachs is assisting Nscale in navigating this substantial capital raise ahead of its planned public listing on the New York Stock Exchange.

Rapid Contract Growth Fueled by Anthropic Deal

Nscale's briefing to investors highlights an explosive growth in its contracted revenue, which has surged from $51 billion reported merely four weeks prior to its current $103 billion. A singular, massive deal largely accounts for this dramatic increase: on August 26, AI research firm Anthropic committed $45 billion to Nscale for computing power.

Interestingly, this substantial capacity was initially offered to other tech titans. Reports indicate that Microsoft withdrew from discussions over the summer following a review of its data center strategy, while Google also passed on the opportunity after assessing its own capital expenditure plans. Anthropic's subsequent agreement with Nscale now serves as a foundational anchor for the company's impending flotation.

Financial Projections and Strategic Investments

While stressing these are illustrative figures rather than formal guidance, Nscale is projecting impressive annual revenue of approximately $18.1 billion and adjusted earnings of around $13.6 billion. These projections starkly contrast with its modest $33 million in revenue for the entirety of 2025, underscoring its hyper-growth trajectory, with the most recent quarter alone surpassing $100 million in revenue.

The convertible notes in the financing round are structured with a double-digit discount relative to the IPO valuation. This discount is designed to narrow as Nscale's market valuation increases, capping its adjustment at a $30 billion valuation.

Nvidia's potential $2 billion investment is particularly strategic. Nscale has already contracted for approximately 194,000 of Nvidia's Vera Rubin GPUs, meaning the chipmaker would be directly financing a key buyer of its high-demand AI chips. This investment deepens the interdependence within the rapidly expanding AI ecosystem.

European Roots, Global Ambitions

Despite its London base and deep integration into European infrastructure projects, Nscale maintains a clear focus on a New York listing. The company's European operations are robust, exemplified by the Narvik project in northern Norway. This data center leverages the region's cold air and abundant Nordic hydropower, securing $790 million in committed debt financing from a consortium of major European banks including ABN AMRO, DNB, Nordea, SEB, and Eksfin, Norway’s state export finance agency. Microsoft is a key customer at the Narvik site, which benefits from Norwegian export credit aimed at supporting projects utilizing local power and labor.

Nscale's board boasts high-profile figures such as Sheryl Sandberg, former COO of Meta, and Nick Clegg, the former UK deputy prime minister and current President, Global Affairs at Meta. This blend of seasoned leadership and strategic financial backing positions Nscale as a formidable force in the global AI infrastructure landscape.

Ongoing deliberations mean the final size of the financing round and the precise composition of investors could still be subject to change, as Nscale moves closer to its pivotal public debut.

FAQ

Q: What is Nscale seeking in pre-IPO financing and from whom?

A: Nscale is seeking up to $3.5 billion in pre-IPO financing. This includes $1.5 billion in convertible notes, expected to be led by Third Point, and approximately $2 billion from Nvidia. Goldman Sachs is also involved in the fundraising efforts.

Q: How has Nscale's contract book grown so rapidly?

A: Nscale's contract book surged from $51 billion to $103 billion in just four weeks, largely driven by a $45 billion deal signed with Anthropic on August 26 for computing power. This capacity was reportedly passed on by Microsoft and Google before Anthropic secured it.

Q: Why is Nscale, a European company, planning a New York listing?

A: Despite being a London-based company, a key player in Europe's AI infrastructure, and partially funded by Nordic state lenders, Nscale intends to list its shares in New York. This likely reflects the global nature of AI financing and the company's ambition to access the deep capital markets and investor base available in the United States.