Microsoft and OpenAI have agreed to restructure the maker of ChatGPT into a public benefit corporation, valuing the company at $500 billion and paving the way for a potential public listing.

Under the new arrangement, Microsoft will hold a 27% stake in OpenAI Group PBC, valued at around $135 billion, which the non-profit OpenAI Foundation will govern.

The deal marks a significant turning point for OpenAI, originally established as a non-profit focused on AI safety, and removes a key obstacle to attracting large-scale investment.

The two companies will remain tied through a long-term cloud computing agreement that runs until at least 2032.

Microsoft will retain rights to certain OpenAI products and models, even if the company reaches artificial general intelligence (AGI)—a level of capability comparable to human reasoning. A new requirement introduces an independent panel to verify any AGI claims made by OpenAI.

“OpenAI has completed its recapitalisation, simplifying its corporate structure,” said Bret Taylor, chair of the OpenAI Foundation’s board. “The non-profit remains in control of the for-profit, and now has a direct path to major resources before AGI arrives.”

Microsoft’s shares rose 4% following the announcement, with analysts calling the move a key step towards OpenAI’s potential public offering.

The agreement also entails OpenAI purchasing $250 billion worth of Azure cloud services. In return, Microsoft will relinquish its prior right of first refusal to provide such services.

Microsoft has invested about $13.8 billion in OpenAI to date, with the latest deal implying nearly a tenfold paper return on its investment.