Nscale Seeks $3.5B Pre-IPO Funding From Nvidia, Third Point
▼ Summary
– Nscale is negotiating a $3.5 billion raise ahead of its New York IPO, with Third Point leading a convertible note tranche and Nvidia providing significant equity investment.
– The company’s backlog has surged to approximately $103 billion, largely driven by a $45 billion computing power contract with Anthropic after Microsoft and Google declined similar deals.
– Investors are being briefed on illustrative annual revenue projections of $18.1 billion, contrasting sharply with the company’s current quarterly revenue of just over $100 million.
– European operations are supported by Nordic financing, including debt from major banks for the Narvik project in Norway, which leverages local hydropower and cold air for cooling.
– The board features notable figures like Sheryl Sandberg and Nick Clegg, while the listing remains subject to final decisions regarding size and investor composition.
Nscale, a pivotal player in Europe’s AI infrastructure expansion, is currently negotiating a massive pre-IPO funding round valued at up to $3.5 billion. This capital raise, which precedes the company’s anticipated debut on the US stock market, includes approximately $1.5 billion in convertible notes led by hedge fund giant Third Point and an additional $2 billion investment from Nvidia. Goldman Sachs is advising on the transaction as Nscale seeks to solidify its position as the continent’s largest AI infrastructure provider.
The valuation of this financing effort is heavily anchored by a dramatic surge in the company’s contract book. Investors are being briefed that Nscale’s total contracts now amount to roughly $103 billion, a significant jump from the $51 billion reported just four weeks prior. The primary driver behind this doubling is a landmark agreement with Anthropic, signed on August 26, for $45 billion in computing power. This deal effectively anchors the upcoming flotation, especially given that major tech rivals like Microsoft and Google declined to participate in this specific capacity during their own internal reviews.
Dominant Contract Wins and Revenue Projections
The loss of these potential partners highlights the competitive landscape for high-performance computing resources. According to reports, Microsoft walked away during a summer review of its data center portfolio, while Google passed after assessing its own capital spending requirements. In contrast, Anthropic secured the rights to this vast processing power, creating a substantial revenue foundation for Nscale.
To illustrate its financial potential to prospective shareholders, Nscale has shared illustrative figures projecting annual revenues of approximately $18.1 billion and adjusted earnings around $13.6 billion. While the company clarifies that these numbers are not formal guidance, they provide context for its growth trajectory. For scale, Nscale generated roughly $33 million in revenue throughout all of 2025, but its most recent quarterly performance surpassed $100 million, signaling rapid acceleration.
The structure of the fundraising involves financial instruments designed to align investor interests with future valuation success. The convertible notes are priced at a double-digit discount to the initial public offering price. This discount mechanism is dynamic; it narrows as the company’s valuation increases and ceases to adjust once the valuation reaches $30 billion. This tiered approach aims to attract early capital while protecting investors from immediate dilution if the IPO valuation exceeds expectations.
Strategic European Operations and Board Leadership
While the listing targets New York, the operational backbone of Nscale remains deeply rooted in Europe, leveraging local energy and financial resources. The Narvik project in northern Norway serves as a critical node, supported by $790 million in committed debt from a consortium including ABN AMRO, DNB, Nordea, SEB, and Eksfin, Norway’s state export finance agency. This facility capitalizes on cold ambient air for cooling and hydroelectric power, with Microsoft identified as the primary customer. Such projects benefit from Norwegian export credit facilities designed to support initiatives utilizing domestic power and labor.
Simultaneously, Nvidia’s involvement creates a symbiotic relationship between supplier and financier. Nscale has contracted for approximately 194,000 Vera Rubin GPUs, meaning Nvidia is effectively helping to finance a major buyer of its own next-generation chips. This strategic alignment underscores the tight coupling between hardware manufacturers and infrastructure providers in the current AI boom.
Governance and strategic direction are overseen by a distinguished board, including former Facebook COO Sheryl Sandberg and former UK Deputy Prime Minister Nick Clegg. Despite the advanced stage of negotiations, deliberations regarding the final size of the raise and the specific mix of investors remain ongoing. No final decisions have been locked in, leaving open the possibility for adjustments before the company executes its plan to sell shares in America, despite its Nordic roots and integration into UK sovereign AI strategies.
(Source: The Next Web)
