Nebius Group plans to offer $2 billion in convertible notes

AMSTERDAM - AI infrastructure company Nebius Group N.V. (NASDAQ:NBIS), whose stock has surged 245% year-to-date and currently commands a market capitalization of $22.85 billion, announced Wednesday its intention to offer $2 billion in convertible senior notes through a private placement to qualified institutional buyers.

The offering will consist of two series: $1 billion in notes due 2030 and $1 billion in notes due 2032. The company also plans to grant initial purchasers options to buy up to an additional $150 million for each series of notes. According to InvestingPro data, Nebius maintains a healthy financial position with a current ratio of 14.7 and operates with a moderate debt-to-equity ratio of 0.32.

Concurrently, Nebius Group is offering $1 billion of its Class A ordinary shares in a separate public offering, with an option for underwriters to purchase up to an additional $150 million in shares.

The company intends to use proceeds from both offerings to finance business growth, including acquiring additional compute power and hardware, securing strategic land plots, expanding its data center footprint, and for general corporate purposes. With the stock trading near its 52-week high of $98.68, InvestingPro analysis suggests the shares are currently overvalued, with 18 additional key insights available to subscribers through the platform’s comprehensive Pro Research Report.

The notes will be senior, unsecured obligations that bear interest on the original principal amount, payable semi-annually. Noteholders will have conversion rights in certain circumstances, with the company settling conversions through cash, Class A shares, or a combination of both.

The 2030 and 2032 notes will mature on September 15 of their respective years. The accreted principal amount will reach 115% of the original principal amount by maturity. The notes cannot be redeemed prior to September 20, 2028, except in cases of tax law changes.

Nebius Group, headquartered in Amsterdam and listed on Nasdaq, describes itself as a technology company building infrastructure for the AI industry with R&D hubs across Europe, North America, and Israel.

The interest rate, initial conversion rate, and other terms for the notes will be determined at pricing. The offering is subject to market and other conditions, according to the company’s press release statement.

In other recent news, Nebius Group has announced several significant developments. The company has launched convertible notes and Class A shares offerings to fund the expansion of its AI infrastructure business. This includes a $1 billion public offering of Class A shares, with underwriters given a 30-day option to purchase an additional $150 million of shares. Additionally, Nebius is offering $2 billion in convertible senior notes, split into two series due in 2030 and 2032, with options for initial purchasers to buy up to an additional $150 million in each series.

In a noteworthy contract development, Nebius Group secured a hyperscaler contract with Microsoft, valued at up to $19.4 billion over five years. Following this announcement, BWS Financial raised its price target for Nebius Group stock to $130, maintaining a Buy rating. Goldman Sachs also reiterated its Buy rating with a $77 price target, highlighting the Microsoft deal as a significant growth driver for Nebius’ AI infrastructure business. These recent developments indicate strategic moves by Nebius Group to enhance its market position and growth prospects.

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