Schneider Electric Banks on AI Boom to Sell €800 Million Debt

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(Bloomberg) — Schneider Electric SE is planning to sell €800 million ($930 million) of debt following a powerful rally on the back of its increasing incursion into the business of supporting data centers.  

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The French power company on Thursday kicked off an offering of convertible bonds — debt that can be swapped for shares at a pre-agreed price — due 2034, according to terms of the deal seen by Bloomberg. If successful, the money raised will be used to repurchase €650 million of outstanding bonds due November 2030, and the rest will be used for general corporate purposes.

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The deal comes after Schneider’s shares have risen 20% over the last two months to a record high, benefiting from investor bets on the infrastructure around the artificial intelligence boom. Schneider is increasingly providing energy and cooling services to data centers, which in turn provide the computing power and data storage necessary for the AI buildout. 

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Schneider’s bonds convertible into company stock have risen in tandem, with the November 2030 note last quoted at a cash price of 143.6 cents. 

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“The AI buildout is one of the most compelling structural trades right now,” said Alexandre Fade, a convertible bond portfolio manager at Fisch Asset Management. “The real beneficiaries aren’t just the chipmakers, but the ‘picks-and-shovels’ names supplying the power and cooling infrastructure that every data center depends on.”  

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The recent rally also means that the company’s share price, at €277, has exceeded the conversion price on the November 2030 notes of €223.3601. Refinancing that bond removes the risk of share dilution, as investors are more likely to want to swap their debt into shares. 

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Those who choose to participate in the new bonds instead will get exposure to the growing AI investment story. Schneider’s data-center related business is about 20% of revenue and increasingly tied to high-density AI workloads, where cooling is becoming a constraint alongside power, Bloomberg Intelligence analysts Omid Vaziri and Sakshi Batra said in a note earlier on Thursday. 

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The bonds are expected to pay a fixed coupon at a rate between 0.25% and 0.75%, and the conversion premium will be set between 35% and 40% above the company’s reference share price. Pricing is expected later on Thursday. 

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