Switch, the Las Vegas-based data center operator, has retained Goldman Sachs and JPMorgan Chase as lead underwriters as it prepares for a possible initial public offering that could come as early as the fourth quarter, according to people familiar with the matter. The offering could raise up to $10 billion and value the company at close to $80 billion including debt, the people said.
The precise size, timing and valuation of the proposed deal remain under review and could change, the sources added. They spoke on condition of anonymity because deliberations are confidential.
If executed on the scale discussed, the listing would rank among the largest U.S. IPOs in recent years and would reflect investor appetite for companies exposed to surging demand for artificial intelligence infrastructure. U.S. IPO proceeds have totaled $155.5 billion so far this year, according to Dealogic, a pace not seen since 2021.
Switch operates sprawling data center campuses that supply the power, cooling and connectivity required to host energy-intensive GPU clusters used to train and run AI models. Its facilities are designed to enable cloud providers and enterprise customers to deploy large-scale computing systems. Customers mentioned in conversations about the company include Nvidia, Dell Technologies and FedEx.
Before the IPO discussions advanced, Switch held talks with private investors about a capital raise at a valuation of at least $40 billion, a third person familiar with that effort said. Reports earlier in the year had flagged preparations for private capital activity ahead of any public offering.
Market interest in AI-related infrastructure has helped swell a pipeline of large technology and infrastructure listings. The prospective Switch IPO sits alongside other planned and recent deals tied to AI compute and data center capacity, including large-scale listings and chipmaker debuts that attracted substantial investor demand. The pipeline also includes other data center providers pursuing U.S. listings and infrastructure companies backed by strategic investors.
Switch was taken private in 2022 by DigitalBridge and IFM Investors in an $11 billion transaction. In 2023, Australian pension fund Aware Super purchased a minority stake from the owners. The company was founded in 2000 by Chief Executive Rob Roy. Since 2016, Switch reports that its data centers have been powered by renewable energy, a characteristic that may be relevant to technology customers with decarbonization goals.
The company, Goldman Sachs and JPMorgan declined to comment.
Summary
Switch has engaged two major investment banks to lead a potential IPO that could raise up to $10 billion and value the firm at nearly $80 billion including debt. The timetable, size and valuation are still being discussed. Switch operates large-scale, renewable-powered data center campuses serving customers such as Nvidia, Dell and FedEx and has previously explored private capital raises at lower pre-IPO valuations.
Key points
- Financial - Switch has hired Goldman Sachs and JPMorgan Chase as lead underwriters for a potential IPO that could raise up to $10 billion and value the company close to $80 billion including debt.
- Market - The proposed offering would be among the largest U.S. IPOs in recent years and comes amid strong investor demand for AI and related infrastructure plays as U.S. IPO proceeds reach $155.5 billion year-to-date.
- Operations - Switch runs large-scale campuses designed for energy-intensive AI computing, with customers including Nvidia, Dell Technologies and FedEx, and reports using renewable energy to power its facilities since 2016.
Risks and uncertainties
- Deal execution - The size, timing and valuation of the IPO are not fixed and could change, introducing uncertainty for investors and market participants - this impacts the financial and capital markets sectors.
- Valuation variance - Private discussions reportedly contemplated a valuation of at least $40 billion prior to the IPO, which differs from the near $80 billion figure being discussed for the public offering; valuation outcomes may affect investor perception in technology and infrastructure markets.
- Market conditions - Broader IPO market dynamics and investor appetite for AI-related infrastructure listings will influence the final terms and success of any offering, affecting technology, data center and financial services sectors.
Contextual note
Reuters reported earlier in 2024 that Switch was considering an initial public offering when those discussions were still at an early stage.