Northern Data Weighs AI Unit US IPO at Up to $16 Billion Value

(Bloomberg) — Northern Data AG is speaking with potential advisers about a US initial public offering of its combined artificial intelligence cloud computing and data center businesses that could fetch a valuation of as much as $16 billion, according to people familiar with the matter.

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

Banks have suggested valuations for the business in a range from about $10 billion to $16 billion, the people said. Northern Data could also sell a minority stake in the unit to investors prior to such a listing, the people said.

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

Shares of Northern Data have fallen about 5% this year, giving it a market value of about €1.3 billion ($1.4 billion). The company, based in Frankfurt, Germany’s financial capital, went public in 2018, a statement at the time shows.

The move comes as cloud computing firms in the AI race are attracting a flood of investment. CoreWeave Inc., a closely 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 has reported.

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

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

Thinning profit margins in crypto mining have prompted 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 graphic processing unit-based operations can give miners an edge over some of the traditional data center operators.

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 butted heads with Kraken for allegedly running an unlicensed exchange, which the company disputes, while the regulatory status of stablecoins remains uncertain.

In 2022, Northern Data had been one of Ether’s top miners and had devoted about 70% of its operations to it. Following a software update in the Ethereum blockchain, the company pivoted away from mining the token, instead developing other businesses such as high-performance computing.

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

Th company is using the funds for purchases of the most sought-after Nvidia Corp. chips. About 20,000 H100s, one of the semiconductor firm’s most advanced AI chips, will be deployed by the end of the summer.