Nebius Group, an AI infrastructure firm listed on Nasdaq, announced a private placement of US$1 billion in senior unsecured convertible notes.

The notes are divided into two tranches: US$500 million in 2.00% convertible notes due in 2029 and US$500 million in 3.00% convertible notes due in 2031.

The proceeds will support Nebius Group’s growth. This includes the acquisition of additional computing power and the expansion of its data center operations.

The notes will be issued on June 5, 2025, and will bear semi-annual interest.

They will also include conversion options under specified conditions.

🔗 Source: Nebius

🧠 Food for thought

1️⃣ Convertible notes offer strategic advantages for capital-intensive AI companies

Nebius’s choice of convertible notes over straight equity reflects a financing strategy typical of capital-intensive tech infrastructure companies.

The structure allows Nebius to raise substantial capital ($1 billion) while protecting against immediate dilution, as the conversion occurs at a premium of 40% over the current share price1.

This approach also includes an accretion mechanism that raises the conversion price over time (to 68% premium for 2029 notes and 75% for 2031 notes), providing further anti-dilution protection while still giving investors potential equity upside.

The timing is strategic: by using debt that converts only if shares rise significantly, Nebius maintains its post-money valuation while securing capital needed for infrastructure expansion that might otherwise require multiple dilutive equity rounds.

This mirrors a trend seen in other high-capital sectors like electric vehicles, where companies use convertible instruments to fund infrastructure buildout phases when capital needs exceed immediate revenue generation.

2️⃣ AI infrastructure buildout creates a new class of capital-intensive tech companies

Nebius’s $1 billion raise highlights the extraordinary capital requirements of building competitive AI infrastructure, creating a class of tech companies more similar to utilities or telecom providers than traditional software businesses.

The company’s CEO explicitly notes this capital-intensive reality, coming just six months after their $700 million equity round in December 2024, demonstrating how rapidly AI infrastructure companies are deploying capital2.