Singapore-based data centre operator DayOne is pressing ahead with plans for a potential US initial public offering as early as November, even as rising financing costs and growing concerns across the artificial intelligence infrastructure sector threaten to make the IPO market more selective.
Three people familiar with the matter said the company is targeting a public filing with the US Securities and Exchange Commission in mid-October, followed by a stock market listing in November.
The people, who spoke anonymously because the discussions are confidential, cautioned that the timetable remains subject to change.
DayOne, which develops and operates data centres for cloud and artificial intelligence customers, declined to comment on the planned offering.
The company’s IPO ambitions come at a pivotal moment for the data centre industry, following setbacks involving other operators and growing investor scrutiny of the enormous sums being committed to AI infrastructure.
The developments have highlighted a widening divide in the sector between operators with existing facilities, secured power and contracted customers and projects that remain dependent on future demand and heavy upfront investment.
“The dividing line is whether demand is contracted and already energised, or only planned,” said Ke Yan, head of research at Singapore-based investment research firm Shenton Research.
With access to electricity emerging as one of the biggest constraints on data centre expansion, Yan said investors were increasingly focused on operators with secured power supplies, substantial contracted capacity that is already operational or nearing completion, and long-term take-or-pay agreements.
IPO window faces fresh pressure
DayOne’s plans come after two developments this week underscored the challenges facing companies seeking to raise money from public investors.
SB Energy postponed its expected IPO, while a dispute involving Oracle and Blue Owl raised questions about a data centre project in New Mexico and potentially its timeline.
The developments suggest that investors are becoming more selective after years of enthusiasm for AI-related infrastructure.
Companies with diversified customer bases and greater visibility over future demand continue to attract attention, while projects heavily dependent on a single AI customer or requiring billions of dollars in upfront capital are facing closer examination.
The increasingly cautious environment could encourage data centre companies with relatively mature operations to move quickly while demand for AI infrastructure remains strong.
Among the companies exploring or preparing potential stock market listings are Switch, Vantage Data Centers and CyrusOne.
Switch has also filed confidentially for an IPO and is expected to launch its offering after DayOne, according to one of the people familiar with the matter.
Switch did not respond to a request for comment.
DayOne banks on diversification
DayOne’s geographical spread and its portfolio of operating data centres could help differentiate it from competitors whose assets are still primarily under development, according to one of the people familiar with the company’s plans.
Backed by investors including Coatue and Hillhouse, DayOne raised $4.5bn in a Series C funding round that closed in June.
The company could seek to raise as much as $5bn through the IPO at a valuation of approximately $20bn, according to previous Reuters reporting.
DayOne says it has secured about 2.1 gigawatts of capacity bookings and operates across the Asia-Pacific region and Europe, with facilities and operations spanning markets including Malaysia, Hong Kong, Japan, Finland and Spain.
That combination of geographic diversification and existing operations is increasingly important as investors assess the risks attached to the rapid expansion of AI infrastructure.
SB Energy postpones IPO
Meanwhile, SoftBank-backed SB Energy has postponed plans to formally market its IPO after working to address additional questions from the US Securities and Exchange Commission.
The delay has also been accompanied by investor concerns over the valuation being sought and the company’s dependence on OpenAI as a major customer, according to people familiar with the matter.
Discussions around SB Energy’s IPO have centred on a valuation of about $60bn, one of the people said.
SB Energy declined to comment.
The company has become part of a complex web of transactions involving SoftBank, OpenAI and Nvidia as demand for AI computing capacity drives massive investment in data centre infrastructure.
Nvidia has agreed to provide a guarantee of up to $105bn to help OpenAI lease an Ohio data centre being developed by SB Energy, while also investing $1.5bn in SB Energy.
SoftBank, an investor in OpenAI, is separately taking investor orders for a $10bn dollar-denominated debt offering to help finance its investments in the AI company. SoftBank has previously taken out a loan backed by its stake in OpenAI.
AI spending approaches $1tn
The pressure on data centre operators comes as the cost of financing the global AI buildout increases.
AI-related capital spending by the six largest US technology companies is projected to reach approximately $1tn in 2027, according to Moody’s.
Higher interest rates increase the cost of financing data centres and other AI infrastructure whose returns may take years to materialise. At the same time, investors are demanding clearer evidence that the facilities being built will generate predictable revenue.
For developers that rely heavily on debt financing, contracted revenue from financially strong customers is particularly important because it provides a source of cash flow for servicing borrowings used to construct expensive AI-ready facilities.
Neil Bear-Hetherington, director of data centre capital markets, Asia Pacific, at CBRE, said customer quality was therefore becoming an increasingly important consideration for investors.
The issue is particularly significant because AI-ready data centres can require billions of dollars in upfront investment, including spending on high-density computing racks, advanced power systems and liquid-cooling infrastructure.
Customer concentration becomes key risk
As the industry expands, investors are paying closer attention not only to the amount of data centre capacity companies control but also to who has committed to use that capacity.
A project dependent on a single major customer may face greater scrutiny than one supported by a broader customer base, particularly if construction requires substantial debt before revenue begins flowing.
That dynamic is putting greater emphasis on long-term contracts, customer creditworthiness and the stage of development of individual facilities.
For companies preparing to go public, the combination of higher interest rates and greater scrutiny of AI infrastructure could make timing increasingly important.
“The earlier the better. Uncertainty is what hurts data-center models. Investors in data centers are looking for yield and growth together, and uncertainty weighs on both, since it raises the cost of the debt that supports the yield and delays the grid and financing that growth depends on,” Yan said.
DayOne’s proposed November listing would therefore come at a critical point for the sector, as investors weigh the enormous growth opportunities created by AI against the cost of financing the infrastructure required to support that growth.
For data centre operators, the ability to demonstrate secured electricity, contracted demand, operational assets and credible customers is increasingly becoming central to how public-market investors assess their prospects.
The coming months could consequently provide an important test of whether the enthusiasm that has fuelled the AI infrastructure boom can translate into sustained appetite for publicly listed data centre companies.