The British infrastructure provider Nscale has secured $3.36 billion through convertible bonds ahead of its planned IPO on the New York Stock Exchange. The round was led by the hedge fund Third Point, with around one billion dollars coming from existing investor Nvidia in mid-November. The capital is primarily intended to finance the global expansion of the company’s data centers.
Convertible Bonds Secure Shares at IPO
As Nscale announced in a press release, a broad group of institutional investors, including Apollo, Citadel, the Abu Dhabi Investment Council, Wellington Management, and several specialized hedge funds, subscribed to the bond alongside Third Point. $2.36 billion will flow immediately, with the remaining billion from Nvidia following in mid-November. The convertible bonds will automatically convert into common shares once the IPO is completed – Nvidia will receive non-voting shares and thus no direct influence on corporate governance. Such convertible bonds have become a common instrument among capital-hungry AI infrastructure companies, as they secure investors a later exchange for shares at the IPO price without requiring a fixed company valuation beforehand. Nscale had already filed a registration statement with the US Securities and Exchange Commission (SEC) on September 18 and aims to list on the New York Stock Exchange under the ticker NSCL. The prospectus mentions a target valuation of up to $35 billion; at the actual IPO, the company aims to raise an additional approximately $3 billion. According to the prospectus, Goldman Sachs, J.P. Morgan, and Morgan Stanley are leading the issuance.
Microsoft and Anthropic Account for Most Contracts
Nscale emerged in 2024 from the Australian crypto miner Arkon Energy and has since developed into one of the largest neocloud providers for rented AI computing power, based in London with data centers in Norway and the US state of West Virginia. The supervisory board includes two prominent names, former Meta manager Sheryl Sandberg and former British Deputy Prime Minister Nick Clegg, who provide the company with additional visibility ahead of the IPO. The prospectus indicates a contract volume of around $103 billion, of which, according to Fortune, a portion is not yet definitively binding. About 85 percent is accounted for by two customers: Microsoft secures computing power worth $43.8 billion until 2033, and Anthropic rents capacity on the Monarch campus in West Virginia for $45 billion, as reported by beckmann.ai. The robot manufacturer Figure is also among the customers: it secured computing power worth $3.5 billion in September, with an option for over $6 billion. For comparison: the already listed competitor CoreWeave on Nasdaq generates about 77 percent of its revenue from just two major customers, according to Fortune. The concentration on a few contract partners is considered a risk in the industry, as a lack of orders would severely impact the utilization of expensive data centers.
Losses Grow Faster than Revenue
Nscale’s revenue rose in the first half of 2026 from $10.4 million to $140.6 million, according to the prospectus. At the same time, the net loss in the same period increased from $369 million to $1.02 billion – a result of high upfront costs for chips, land, and power connections incurred when building new data centers before the associated contracts generate revenue. Such a gap between revenue and loss is considered typical in the industry for the early construction phase of capital-intensive data center campuses, whose revenues often only materialize years after the first shovel hits the ground. Nvidia CEO Jensen Huang defended his company’s involvement to Fortune: “Without our support, Nscale would not be where it is today.” The statement describes a pattern that is increasingly attracting criticism in the industry: Nvidia invests in cloud providers like Nscale, which in turn buy Nvidia chips and lease them to AI companies – a cycle that secures both demand and supplier loyalty. Similar dynamics are now shaping the entire industry: Anthropic alone reportedly has industry-wide computing power commitments of up to $517 billion.
It remains to be seen whether investors will actually grant a company with a half-year loss in the billions a valuation of $35 billion once the stock is tradable. Nscale has not yet announced a specific date for the IPO; the investors of the current convertible bond already bear the risk until then, as their capital only converts into shares upon listing.
