Some prospective investors want Nscale to list at $16bn to $19bn, against the roughly $30bn it has been targeting. The pressure follows Microsoft's exit as anchor tenant of the London neocloud's first British data centre.
Nscale is preparing to raise as much as $3bn in a New York float. It now has two problems: it has lost the customer at its flagship UK site, and investors are pushing back on its price.
The Telegraph reported on Sunday that Microsoft has pulled out of the data centre Nscale is building in Loughton, Essex. Microsoft had been due to rent 23,000 Nvidia chips there and was the site's only announced customer.
The site was meant to come online next year. However, grid operators have reportedly told Nscale they do not expect to supply power until the 2030s. Microsoft did not comment.
A spokesman for Nscale said the company remains committed to Loughton and to the UK, and is looking at other power sources for the site. He added that what he called a "London-wide grid issue" has no impact on its other contracts.
The valuation gap
Bloomberg reported that Nscale has been seeking an IPO valuation of about $30bn. A group of investors has argued that $16bn to $19bn would be more likely to attract buyers. They point to the collapse of the planned listing of Australian data centre operator Firmus.
That lower range would leave little uplift for recent backers. Nscale was valued at $14.6bn in its last private round, according to Trending Topics. At $16bn, a float would price the company about 10% above that mark. At $19bn, the premium would be about 30%. At $30bn, the valuation would roughly double.
In September, Nscale raised a $3.36bn pre-IPO financing led by Dan Loeb's Third Point. Nvidia, Apollo Global Management, Citadel, Hudson Bay Capital and Abu Dhabi Investment Council also took part. The pricing terms of those instruments have not been disclosed.
Concentration risk in the numbers
The prospectus figures explain much of the caution. Nscale reported revenue of $140.6m for the first half of the year and a net loss of about $1bn. Its order backlog stands at $103bn, but only $2.6bn of that comes from contracts that are already running.
Customer concentration is high. According to the IPO filing, Microsoft and Anthropic together account for about 85% of Nscale's contracts. The Telegraph put Microsoft's share of the total backlog at more than 40%.
Nscale has had delivery problems elsewhere. Its flagship Norway facility is running six months late, with 6.4 megawatts of a planned 30 megawatts in operation. Earlier this year, OpenAI shelved a planned Stargate site with Nscale in north-east England, citing British electricity prices.
What happens next
Nscale filed publicly for its US listing on 18 September. The required 15-day waiting period has passed, but the company has not begun formal marketing. It is still working through comments from the Securities and Exchange Commission.
Sentiment towards listed peers has turned sharply. CoreWeave lost a quarter of its market value last week, and Nebius shares fell 32% over two weeks. Nscale declined to comment, and no final decisions have been made, according to people familiar with the plans.
Original source: Bloomberg, via The Business Times — https://www.businesstimes.com.sg/companies-markets/ai-cloud-firm-nscale-faces-investor-pushback-over-ipo-valuation (Microsoft exit first reported by The Telegraph — https://www.telegraph.co.uk/business/2026/10/18/microsoft-axes-ai-deal-setback-uk-data-centre-pioneer/)
