Microsoft has pulled out of an agreement to become the anchor tenant at Nscale’s planned artificial intelligence data centre in Loughton, Essex, putting pressure on the British company’s proposed multibillion-dollar flotation and the potential £30 million windfall for former deputy prime minister Nick Clegg.
Nscale filed in September for a listing on the New York Stock Exchange, targeting a valuation of $35 billion (£26.25 billion). The company is privately valued at $15 billion.
Mr Clegg, who joined Nscale’s board seven months ago, owns 917,000 shares, equivalent to 0.12 per cent of the business. At the proposed valuation, his stake could be worth up to £30 million, although that prospect is now less certain.
Microsoft is one of Nscale’s two largest customers and accounts for 40 per cent of its contracted revenue. It told the company it was withdrawing from the Loughton agreement because of concerns about construction delays and the availability of power.
The site was intended to house 23,000 high-end chips rented by Microsoft. Such facilities provide the physical infrastructure needed to train, test and operate artificial intelligence models used in applications including ChatGPT, Claude and Microsoft’s Copilot.
The Loughton data centre was originally due to begin operating next year. However, grid executives are now predicting that the site will not receive a power supply until the 2030s.
The project has already faced repeated delays. Photographs taken in March showed the proposed location still operating as a scaffolding yard.
The Microsoft agreement had been announced as part of £22 billion of investment promised during Donald Trump’s state visit last year. When Labour unveiled its artificial intelligence strategy in 2025, the Loughton facility was described as set to become the UK’s largest sovereign AI data centre.
Nscale remains committed to Loughton project
Nscale said it was still committed to the Loughton development and was considering alternative sources of power, as well as other expansion sites in Britain.
An Nscale spokesman said: “We remain committed to both the Loughton project and the UK, and we are exploring alternative power sources for the site, in addition to other expansion sites in the UK.
“Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts.”
Microsoft did not comment on the decision.
Nscale was created after being spun out of Arkon Energy, a Melbourne-based cryptocurrency mining business. It later shifted its focus to AI infrastructure and now has data centres in Norway, Portugal and Iceland, as well as three in the United States and others operated with partners.
Mr Clegg joined the company after leaving Facebook owner Meta, where he served as president of global affairs and was reported to have earned about £100 million during seven years with the group.
The former Liberal Democrat leader entered the technology sector after losing his Sheffield Hallam seat in 2017. He was appointed to Nscale’s board alongside former Meta executive Sheryl Sandberg.
The proposed flotation will be closely watched as a test of investors’ confidence in AI companies. Shares in rival data centre businesses have fallen in recent days amid concerns about their ability to repay debt.
Nvidia chief executive Jensen Huang praised Nscale at a London event this week, saying: “You could be the most valuable UK startup they have created in the last 10 years.”
