Northern Data evaluates AI unit IPO worth up to US$16 billion

(Bloomberg) — Northern Data AG is talking to potential advisers about a U.S. initial public offering of its combined artificial intelligence, cloud computing and data center businesses, which could fetch a valuation of up to $16 billion, people said. familiar with the subject.

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The company has asked several potential advisers to look for a role and could name lead banks in the coming months, the people said. Under the current plan, Northern Data would list an entity comprising its cloud computing activities, called Taiga, and its data centers, called Ardent, on the Nasdaq as early as the first half of next year, they said.

Banks have suggested valuations for the deal in a range of about $10 billion to $16 billion, the people said. Northern Data could also sell a minority stake in the unit to investors ahead of such a listing, the people said. Northern Data shares rose as much as 19% at 9:10 a.m. in Frankfurt, the biggest gain in more than a year, giving the company a market value of around 1.56 billion euros ($1.7 billion).

Deliberations are ongoing, details could change and the company could decide not to pursue strategic options under consideration, the people said. A representative for Northern Data declined to comment.

The company, based in Frankfurt, Germany’s financial capital, went public in 2018, a statement from the time shows.

The move comes as cloud computing companies in the AI ​​race are attracting a flood of investment. CoreWeave Inc., a privately held cloud computing provider, raised $8.6 billion in funding, including a $1.1 billion preferred equity investment that gave the startup a $19.1 billion valuation , Bloomberg News reported.

Narrower profit margins

Northern Data was considering an IPO just for the cloud unit and, separately, a U.S. listing for its Bitcoin mining operations, it told analysts and investors in November.

Peak Mining, the company’s U.S. Bitcoin mining unit, has nearly 700 megawatts of data centers under construction or active development, according to a May statement. This would make it one of the largest crypto miners in the US.

Shrinking profit margins in crypto mining have led miners to convert their energy-intensive data centers into digital infrastructure that can power generative AI applications. Access to large amounts of power and experience in running operations based on graphics processing units could give miners an edge over some of the traditional data center operators.

The story continues

Would-be public companies in the crypto industry, such as stablecoin issuer Circle and digital asset exchange Kraken, have faced headwinds. The US Securities and Exchange Commission has slammed Kraken for allegedly running an unlicensed exchange, which the company disputes, while the regulatory status of stablecoins remains unclear.

In 2021, Northern Data was one of the top Ether miners and dedicated around 70% of its operations to it. After a software update on the Ethereum blockchain, the company stopped mining the token and started developing other businesses, such as high-performance computing.

Northern Data in November secured a €575 million debt financing instrument from stablecoin company Tether Group, and in January completed the acquisition of a Tether vehicle valued at €400 million, making Tether the lead investor in Northern Date, according to a statement.

The company is using the proceeds to buy Nvidia Corp.’s most sought-after chips. About 20,000 H100s, one of the semiconductor company’s most advanced AI chips, will be deployed by the end of the summer.

(Updates with reaction shared in third paragraph.)

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