SB Energy, an energy and infrastructure developer under SoftBank Group, has filed for an initial public offering with the U.S. Securities and Exchange Commission. The company is seen targeting a valuation of about $50 billion (roughly 68 trillion won), but it has yet to generate any profit from data centers, its core business — a structure some read as a textbook case of circular financing built around OpenAI and Nvidia.
Japan's Nihon Keizai Shimbun reported on the 2nd, citing SB Energy's S-1 registration statement filed with the SEC, that the company plans to list on the Nasdaq. According to The Wall Street Journal, SB Energy is aiming to raise $5 billion to $7 billion.
SB Energy has been expanding its valuation rapidly by making the construction and operation of AI data centers, a push led by SoftBank, its core business. Data center capacity that the company has contracted or has under construction totals 8.8 gigawatts. According to the registration statement, first-half revenue rose 66.4% from a year earlier to $138.7 million. Reuters reported in May that SB Energy was targeting a valuation of more than $50 billion in its IPO. That is more than four times the value of PayPay, the mobile payments affiliate also under SoftBank that listed in the U.S. in March.
The problem is that SB Energy has generated no profit from building data centers, and none of its facilities are yet in operation. Its net loss in the first half widened to $3.21 billion from $215.5 million a year earlier.
Instead, SB Energy is leaning on OpenAI, expected to be its largest customer, and Nvidia, a key investor. OpenAI is a tenant at data centers SB Energy is building. Earlier this year, OpenAI and SoftBank each invested $500 million in SB Energy as part of the Stargate project to build AI data centers. The Wall Street Journal reported that SB Energy has agreed to grant OpenAI warrants for 4 million shares.
Nvidia, which supplies graphics processing units to data centers, is backing SB Energy even more heavily. It is investing $3 billion in SB Energy, the data center landlord, while also putting $30 billion into OpenAI, the tenant. Nvidia has also signed an agreement to guarantee $105 billion should OpenAI fail to pay rent on the world's largest data center that SB Energy is building in Ohio.
SB Energy has said it will need to invest more than $170 billion in data center construction going forward. That raises the possibility that some of the $500 billion Nvidia agreed last month to raise with Wall Street firms could flow to SB Energy.
SB Energy itself has identified OpenAI's business condition as a risk. In its filing, the company warned that a deterioration in OpenAI's finances or a reassessment of its contracts could "result in the loss of data center revenue and have a material adverse effect on our business, financial condition and results of operations." It added that while 92% of companies plan to increase AI spending over the next three years, only 1% of business leaders classify their own organization as mature in AI adoption, which it said means that even companies that have already deployed AI are in the early years of their investment cycle.
