OpenAI $7 billion share sale gives employees liquidity before possible IPO

OpenAI’s $7 billion share sale was reportedly a company buyback of stock held by current and former employees, rather than a new funding round. For investors watching a possible OpenAI IPO, the distinction matters: the deal gave employees a way to turn part of their equity into cash while OpenAI remains privately held.

Bloomberg reported on Aug. 10 that OpenAI completed a tender offer, a process in which shareholders are invited to sell shares back to a company, involving roughly $7 billion in stock. Citing people familiar with the nonpublic transaction, Bloomberg said OpenAI itself bought the shares rather than bringing in outside investors.

The reported transaction valued the ChatGPT maker at $852 billion, unchanged from the valuation in its most recent funding round, according to Bloomberg. CNBC separately reported the sale and said it included stock held by current and former employees.

That means the reported $7 billion was not described as fresh capital raised for OpenAI’s operations. It was an employee-liquidity transaction. A company buyback can take several forms; in this case, a tender offer gave eligible holders an opportunity to sell directly to the company. Readers can find a broader guide to how stock buybacks work.

Does OpenAI’s $7 billion share sale mean an IPO is near?

The transaction does not set an IPO date. CNBC reported that OpenAI confidentially filed IPO paperwork with the Securities and Exchange Commission in June, but that the company had not disclosed an official timetable for a public-market debut.

A confidential draft registration statement is reviewed outside public view at first. For an initial public offering, SEC guidance says an issuer must publicly file its registration statement, initial draft and amendments at least 15 days before a road show. If there is no road show, the materials must be public at least 15 days before the requested effective date.

For employees whose compensation includes private-company shares, tender offers can provide an alternative to waiting for a listing to sell stock. TechCrunch reported that OpenAI did not respond to its request for comment before publication.

How the reported valuation compares

The $852 billion figure is the reported valuation used for this transaction, not a public-market share price. It follows OpenAI’s reported $122 billion funding round in March, CNBC said.

OpenAI has used employee tender offers before. CNBC reported a $6.6 billion offer at a $500 billion valuation in October, along with a $1.5 billion tender offer in 2024. The new deal extends that pattern of providing a route for employees to sell shares while the company’s potential IPO remains without a publicly disclosed schedule.

This story draws on original reporting from CNBC.