Global Market: DayOne pushes ahead with potential November IPO amid data center scrutiny

Data center operator DayOne is moving forward with plans for an initial public offering as soon as November, even as higher interest rates and setbacks across the data center industry threaten to make the IPO market more selective, according to three people familiar with the matter cited by Reuters.

The Singapore-based company, which develops and operates data centers for cloud and artificial intelligence customers, plans to publicly file its registration with the US Securities and Exchange Commission in mid-October and could list in November, the people said. The timing and details of the offering remain subject to change.

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DayOne declined to comment

The company's IPO plans come after two developments that have highlighted growing investor scrutiny of AI infrastructure. SoftBank-backed SB Energy delayed its expected IPO, while a dispute involving Oracle and Blue Owl raised concerns about a data center project in New Mexico, according to the report by Reuters.

The developments underscore a maturing market after years of strong investor enthusiasm for AI infrastructure. Operators with diversified customers and greater visibility into demand may continue to attract investor interest, while projects dependent on a single major AI customer or requiring substantial upfront capital face closer examination.

Investors are increasingly focused on whether data center demand is supported by contracted revenue and existing power availability, the report stated, citing Shenton Research head of research Ke Yan. Secured power supplies, operational or near-completion capacity and long-term take-or-pay agreements are becoming important factors for investors assessing the sector.

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The scrutiny comes as several data center companies prepare to enter the public markets. Switch, Vantage Data Centers and CyrusOne are among operators exploring or preparing IPOs.

Switch has 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's diversified footprint

DayOne's geographic diversification and portfolio of operating data centers could help distinguish it from rivals that remain heavily focused on projects still under development, one of the people said.

The company is backed by investors including Coatue and Hillhouse. It raised $4.5 billion in a Series C funding round completed in June and could seek to raise as much as $5 billion through an IPO at a valuation of around $20 billion, Reuters has previously reported.

DayOne has secured about 2.1 gigawatts of capacity bookings and operates across Asia-Pacific and Europe, including Malaysia, Hong Kong, Japan, Finland and Spain, according to its website.

SB Energy, meanwhile, postponed plans to formally market its IPO after receiving additional questions from the SEC. Investors have also raised concerns about the valuation it is seeking and its reliance on OpenAI as a major customer, according to people familiar with the matter cited by Reuters.

SB Energy is seeking a valuation of about $60 billion, one of the people said. The company declined to comment.

The relationship between SB Energy, SoftBank, OpenAI and Nvidia has also become increasingly intertwined as companies seek to finance the rapid expansion of AI infrastructure.

Nvidia has agreed to provide a guarantee of up to $105 billion to support OpenAI's lease of an Ohio data center being developed by SB Energy, while also investing $1.5 billion in the company.

SoftBank, an OpenAI backer, is separately seeking investor orders for a $10 billion dollar-denominated debt offering to help finance its investments in OpenAI. The Japanese conglomerate has previously taken a loan backed by its OpenAI stake.

Financing costs raise pressure on AI infrastructure

The cost of financing the AI infrastructure buildout is also facing greater scrutiny as interest rates remain elevated. Higher borrowing costs can make it more difficult to finance data center projects whose returns may take years to materialize.

For developers that rely on debt financing, contracted revenue from financially strong customers is particularly important because it provides greater visibility into the cash flows available to service borrowings while expensive AI-ready facilities are being built, the report by Reuters stated, citing Neil Bear-Hetherington, director of data center capital markets, Asia Pacific, at CBRE.

AI-focused data centers can require billions of dollars of upfront investment, including spending on high-density computing racks, power infrastructure and liquid-cooling systems.

As a result, investors are paying closer attention to the identity and financial strength of customers supporting individual projects. The heightened scrutiny could make the IPO market less forgiving for companies that cannot demonstrate clear demand, secured power and predictable cash flows, according to the report.

For companies such as DayOne preparing to tap public markets, the combination of strong long-term AI infrastructure demand and a more selective investor base could make the timing of an offering increasingly important, the report stated.

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