SoftBank's SB Energy is proceeding with an initial public offering (IPO) targeting a $50 billion valuation and aiming to raise at least $5 billion, despite having no operational data centers and limited experience in running such facilities. The IPO is critical for SB Energy to secure working capital for the construction of two massive data centers for OpenAI in Texas and Ohio, which are projected to account for 97% of its $439 billion revenue backlog. The market backdrop for AI names is challenging, and the IPO will need to convince investors that this contracted demand can translate into cash flow, especially given SB Energy's significant net losses of $738 million in 2025 and $3.21 billion in the first half of this year.
The financing arrangements for SB Energy and OpenAI are complex and involve significant interconnectedness. SoftBank is the controlling shareholder of SB Energy and also the second-largest shareholder in OpenAI, having committed $64.6 billion to build a 13% stake in the AI lab. OpenAI holds warrants in SB Energy, valued at $5.5 billion, as part of the deal to rent capacity. Nvidia is also involved, acting as a guarantor for OpenAI on the first 4.25GW phase of construction in Ohio in exchange for an exclusive chip supply agreement and a potential $105 billion rent liability. Nvidia has also committed to investing $1.5 billion in SB Energy stock at a 10% discount to the IPO price and another $1.5 billion in a private placement.
The delay of OpenAI's IPO, now pushed to 2027, adds pressure to SB Energy's offering. A successful IPO for SB Energy is seen as vital for SoftBank to obtain a market valuation for this asset and potentially reduce its significant net asset value (NAV) discount, which is estimated to be around 40%. SoftBank has been using its OpenAI stake to secure liquidity, including a $10 billion loan backed by the holding, which Apollo Global Management is considering increasing to $9 billion. The ongoing construction of the data centers, particularly the 8GW facility in Ohio for OpenAI, is expected to incur substantial additional indebtedness, with current contracted projects estimated to cost $178 billion to build.
