SoftBank’s US data centre developer, SB Energy, has slowed its initial public offering (IPO) process amid growing market concerns about the sustainability of the artificial intelligence (AI) sector’s rapid expansion. The company, backed by SoftBank founder Masayoshi Son’s Japanese investment group along with AI firms OpenAI and Nvidia, had been targeting a valuation of approximately $50 billion despite not yet operating a single data centre.
Insiders familiar with the matter indicated that SB Energy is pausing the IPO to wait for more stable investor sentiment regarding demand for data centre computing capacity. Market apprehension has been fueled in part by public commitments from leading AI laboratories, including OpenAI and Anthropic, to slow the pace of AI model development citing safety considerations. Investors worry these steps could reduce near-term demand for computing power, introducing uncertainty into the market outlook.
SB Energy has expressed its intention to move forward with the public listing and is monitoring conditions before pushing ahead, according to a source close to the company. The altered timeline was first reported by the New York Times. The company also recently engaged in talks for a possible $4.9 billion debt issuance linked to the IPO, though early investor feedback suggested the debt might carry a yield near 10 percent, a level indicating a below-investment-grade credit rating. Citi, reportedly leading the debt transaction, declined to comment.
Nvidia has played a significant role in supporting SB Energy’s offering, having purchased $1.5 billion worth of shares in August at a roughly 10 percent discount to the anticipated IPO price and committing to buy an additional $1.5 billion in shares at the time of the public listing, according to regulatory filings disclosed on Monday.
The cautious stance taken by SB Energy mirrors broader industry challenges. Earlier in the week, Holtec International, a nuclear energy company aiming to supply power to AI-focused data centres, postponed its IPO by at least three months. Holtec’s CEO, Kris Singh, described the situation as facing a “perfect storm” of negative market sentiment around AI infrastructure.
Additional concerns contributing to the market’s hesitancy include potential political and regulatory backlash against large-scale data centre construction and the broader risks associated with AI technology development. Some investors fear that these factors could prompt new regulations that slow the current growth trajectory of data centre investment and AI applications.
While the sector remains under scrutiny, SB Energy continues to evaluate strategies for its public offering and associated financing, looking to balance investor appetite with prevailing market conditions.