Nscale, one of Britain’s most prominent artificial intelligence companies, has suffered a major setback after Microsoft abandoned plans to become the principal occupier of its proposed data centre in Essex.
The AI infrastructure group launched preparations for a multibillion-dollar listing on the New York Stock Exchange in September, with the flotation aimed at securing a valuation of $35billion (£26.25billion).
Such a valuation could have generated a windfall of as much as £30million for former Deputy Prime Minister Nick Clegg. The Nscale board member owns approximately 917,000 shares, equivalent to a 0.12 per cent stake in the business.
However, the planned IPO now faces fresh uncertainty after Microsoft told Nscale it would withdraw from the agreement, reportedly citing concerns about delays to construction and the availability of electricity.
Microsoft is one of Nscale’s two biggest customers and accounts for about 40 per cent of its contracted revenue. Under the original arrangement, the US technology giant was due to serve as the anchor tenant at Nscale’s first UK facility in Loughton, Essex, leasing 23,000 advanced AI chips.
Those processors form part of the vast physical computing systems required to train, evaluate and run the artificial intelligence models powering services including ChatGPT, Claude and Microsoft Copilot.
The Loughton data centre was initially scheduled to begin operating next year. But executives overseeing the electricity grid are now forecasting that a connection may not be available until the 2030s.
The latest blow follows a series of delays affecting the project. Images taken in March showed that the site was still being used as an active scaffolding yard rather than resembling a nearly completed AI facility.
Nick Clegg (pictured in 2023) could receive a £30million windfall if the British AI company successfully floats on the New York Stock Exchange
An artist’s impression shows the planned Loughton, Essex data centre, although photographs taken in March showed the site was still operating as a scaffolding yard
The Microsoft agreement formed part of a £22billion investment package announced during Donald Trump’s state visit last year.
When Keir Starmer’s Labour government published its AI strategy in 2025, the Loughton site was presented as set to become the largest sovereign artificial intelligence data centre in the UK.
Clegg joined Nscale’s board seven months ago, having left his senior position at Meta, Facebook’s parent company, the previous year.
At the time, Nscale described him as bringing “substantial global depth” in technology, policy, operations and governance to its leadership team. Sheryl Sandberg, his former Meta colleague and boss, was also offered a board position.
Clegg is understood to receive an annual retainer of $60,000 (£45,000), alongside a share award worth $260,000 (£195,000). Yet the much larger potential payout of up to £30million depends on the company’s Wall Street flotation and is now far less certain.
That uncertainty has increased because Microsoft was expected to become the main customer at the Loughton facility. Its decision to walk away could therefore have significant consequences for Nscale’s growth plans and IPO prospects.
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Clegg first became a household name in 2010, when his confident performances in the televised election debates triggered a surge of public enthusiasm widely known as “Cleggmania”.
His standing deteriorated sharply after he entered coalition government with the Conservatives. A series of policy reversals, including the decision to abandon a pledge to oppose higher university tuition fees, drew fierce criticism. Later that year, student protesters burned an effigy of the Liberal Democrat leader.
Clegg lost his Sheffield Hallam parliamentary seat in 2017, but his move into the technology industry has proved highly profitable.
He is estimated to have made about £100million during seven years working alongside Mark Zuckerberg at Meta. After becoming the company’s President of Global Affairs in 2022, Clegg was given the nickname “master of the Metaverse”.
Nscale was spun out of Arkon Energy, a Melbourne-based cryptocurrency mining business.
The company pivoted to AI infrastructure, billing itself as ‘the engine of superintelligence’, and is heavily backed by chip firm Nvidia.
Nscale already has data centres in Norway, Iceland, which run on either hydro or geothermal power – an option not available for the Loughton site.
The firm also has data centres in Portugal and the United States, and runs a number of others with corporate partners.
Nscale has been privately valued at $15billion, but it is seeking to raise billions of dollars in a float that would more than double that figure.
All eyes will be on the outcome of its attempt as a measure of investors’ continued faith in AI companies.
Share prices of rival data centres have plunged in recent days over concerns they will struggle to pay off their debts.
A Nscale spokesman told The Telegraph: ‘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.’
Nvidia’s chief executive, Jensen Huang, praised Nscale this week at an event in London, saying: ‘You could be the most valuable UK startup they have created in the last 10 years.’
Microsoft did not comment.
