SoftBank Group's U.S. data center developer has slowed its IPO timeline amid growing market concerns over the durability of the AI boom, while a potential $5 billion debt issuance tied to the offering has also lost momentum. SB Energy, backed by Masayoshi Son's SoftBank Group, OpenAI, and Nvidia, still aims to list at a valuation of around $50 billion, even though none of its data centers are currently in commercial operation.

According to sources familiar with the matter, SB Energy has tempered its listing pace in response to unease over computing power demand, choosing to wait until investor sentiment toward the data center sector stabilizes before moving forward. A person close to the company added that SB Energy remains committed to completing the IPO, continuously evaluating market conditions throughout the listing process.

This marks the second company within a week to postpone its listing plans due to fears of an AI industry slowdown. Holtec International, a nuclear power firm seeking to supply electricity to AI data centers, delayed its IPO by at least three months last Wednesday. Chris Singh, CEO of Holtec, described the situation as a "perfect storm" of negative market sentiment surrounding AI data centers.

Investors are worried that major AI labs such as Anthropic and OpenAI, citing safety concerns, have pledged to slow down model development, which could lead to a decline in computing power demand. Anthropic itself is also preparing for an IPO. Some market participants fear that public opposition to data center construction and various AI-related risks could trigger new regulations, potentially curbing the AI industry's momentum.

Insiders revealed that SB Energy has also held talks with investors in recent weeks regarding a $4.9 billion bond issuance to accompany the IPO. Sources say that after preliminary discussions, investors expect a yield of roughly 10% on these bonds, a pricing level consistent with junk-rated debt. Citigroup, which is leading the bond deal, declined to comment. A person close to SB Energy stated that the company's current focus is on the IPO, with any additional debt financing to be considered only after listing.

In a filing submitted Monday, SB Energy disclosed that Nvidia purchased a 10% stake in the company in August for $1.5 billion, priced at a 10% discount to the final offering price. The chip giant has also agreed to buy another $1.5 billion of shares at the IPO price, bringing its total investment to $3 billion.

Sources added that investors are also concerned about SB Energy's heavy reliance on OpenAI as its primary customer, especially given the unprofitable startup's recent commitment to slow AI research and development. OpenAI has also delayed its own IPO and is in talks for a private funding round that could value the company at roughly $1.2 trillion. The delay in OpenAI's listing has added pressure on SoftBank, which has pledged over $60 billion in investments to the AI enterprise founded by Sam Altman.

SB Energy has yet to disclose a credit rating but has reduced project financing costs through credit support from infrastructure partners. Nvidia has agreed to provide up to $105 billion in backstop support for SB Energy's data center campus in Pike County, Ohio, which is leased to OpenAI under a 20-year agreement and is expected to become the world's largest data center.

In its prospectus, SB Energy warned that fulfilling existing contracts would require $174 billion in data center investments. The company said it plans to fund most of this through project-level debt, but cautioned that it "may be difficult to raise sufficient capital for the project pipeline, especially in a tightening debt market."

In the IPO filing, SB Energy stated it would take on significant additional debt to repay short-term maturities and fund reserve projects, which would put equity investors at a disadvantage. Existing debt covenants also prohibit any cash dividend payments before 2029.