Microsoft Cancels UK Data Center Deal with Nscale, Jeopardizing Its Planned $35 Billion IPO
Microsoft terminated a key AI infrastructure contract with British neocloud startup Nscale due to grid power delays, casting doubt on its ambitious US listing and highlighting sector vulnerabilities.
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According to a report by SiliconANGLE citing The Telegraph, Microsoft Corp. has terminated an agreement to rent artificial intelligence infrastructure from British neocloud startup Nscale Global Holdings Ltd. at its planned facility in Loughton, Essex. The cancellation follows warnings from UK grid officials that adequate power would not be available for the site until the 2030s.
A spokesperson for Nscale stated that the relationship with Microsoft remains "strong and long-term" and insisted that the grid issue does not impact other contracts signed with the software giant. However, the setback comes just one month after Nscale confidentially filed for an initial public offering (IPO) with the U.S. Securities and Exchange Commission. The company aims to list on the New York Stock Exchange under the ticker NSCL, reportedly seeking to raise $3 billion at a valuation of approximately $35 billion, significantly higher than its private valuation of $15 billion.
The incident underscores the fragility of "neocloud" operators, specialized cloud infrastructure providers competing with hyperscalers like AWS and Azure. These companies rely heavily on securing billions in funding for construction and depend on a small number of major customers. Nscale's IPO filing indicates that Microsoft and Anthropic PBC account for roughly 85% of its total contract value. The loss of the Loughton facility may increase investor skepticism regarding the company's growth trajectory.