Nvidia-backed data centre operator Firmus pulls $5bn Australia IPO
Firmus, an AI data centre operator backed by Nvidia, has scrapped its A$5 billion IPO in Australia amid growing investor scrutiny of AI valuations and sustainability. The company will pursue private fundraising and may target a Nasdaq listing instead.
Australia's Firmus, a data centre operator backed by Nvidia, shelved its US$5 billion initial public offering (IPO) on Friday, adding to growing investor scrutiny of the AI sector's valuations and the sustainability of massive investments to build infrastructure, sources said.
Firmus said it would now opt for a private fundraising round, and a person involved in the transaction said that would be followed by a Nasdaq listing. The person could not be named discussing information that was not public. The company declined to comment on whether it would target a Nasdaq listing.
Firmus' IPO would have been the second-largest new share sale in Australia's history but met lukewarm demand, a warning sign that investors are becoming increasingly selective about AI issuers amid a massive round of fundraising via debt and equity, sources said.
"The company will now pursue capital from private markets and consider alternative international public market options to support its next phase of growth," said co-founders Oliver Curtis and Tim Rosenfield in a letter sent to shareholders. "We will continue to assess opportunities that provide the best platform to fund growth, create value and position Firmus for success."
Firmus, backed by major AI companies and investors Nvidia and Coatue Management, along with Blackstone and Jane Street, designs and operates modular AI factories using proprietary energy and cooling technology. At US$5 billion, the closely-watched IPO would have ranked as the fourth-largest public offering globally so far this year, behind SpaceX, CXMT Corp and Cerebras Systems, according to Dealogic data.
Firmus initially planned to sell its shares at A$11 each, giving it an equity valuation of US$30.6 billion, nearly triple the US$10.5 billion valuation it achieved following a fundraising round at the start of August. The pricing came under pressure as investors grew concerned about the company's debt pile, its lack of a track record in building AI data centres and media reports about a key partner pulling out of an A$73 billion data centre development deal, sources said.
"They were asking for a very big price tag for what would likely be expected to happen in the future assuming near flawless execution," said Joseph Koh, a portfolio manager at Blackwattle Investment Partners. "And so I think the market wasn't comfortable taking that leap of faith quite at this stage yet."