OpenAI has successfully executed a significant secondary share sale, totaling $6.6 billion, which places its valuation at an astonishing $500 billion. This transaction allows current and former employees to liquidate their stock holdings at a record valuation. The deal was first reported by Bloomberg.
Details of the Share Sale
In a bid to attract investment and encourage employee participation, OpenAI authorized the sale of shares up to $10.3 billion, an increase from the initial target of $6 billion. However, only about two-thirds of this amount was sold. Sources indicate that the lower participation level has been interpreted internally as a vote of confidence in OpenAI’s long-term potential.
- Transaction Amount: $6.6 billion
- Company Valuation: $500 billion
- Shares Authorized for Sale: Up to $10.3 billion
- Participation Rate: Approximately 66% of the total shares available were sold
Investor Involvement
Key investors in this share sale included Thrive Capital, SoftBank, Dragoneer Investment Group, MGX from Abu Dhabi, and T. Rowe Price. The interest shown by investors remains robust, especially given the substantial valuation—this reflects a rise from a previous valuation of $300 billion earlier in the year.
Employee Participation
The opportunity to participate in the stock sale was presented to eligible employees in early September. Eligible participants were those who had held shares for more than two years. This move forms part of OpenAI’s strategy to reward and retain talent amid increasing competition for AI specialists.
Significance of the Sale
This transaction marks OpenAI’s second major tender offer within a year, following a $1.5 billion sell-off to SoftBank in November. The completion of this share sale solidifies OpenAI’s position as the most valuable privately held company worldwide, eclipsing SpaceX’s valuation of $456 billion.
This substantial share sale occurs at a time when companies like Meta are offering competitive compensation packages, in a bid to attract leading AI talent. Additionally, OpenAI joins other prominent startups, such as SpaceX, Stripe, and Databricks, in utilizing secondary sales to allow employees to cash out without pursuing an initial public offering (IPO).
