Nvidia-backed Firmus scraps $5 billion Australian IPO, will seek private funding

The decision

Firmus, a data centre operator backed by Nvidia, has shelved its initial public offering, citing market volatility and conditions. The company said it would instead opt for a private fundraising round.

Firmus will now pursue capital from the private markets and consider alternative public and private market options

In its statement, Firmus said the terms did not correctly reflect the strength of its business and long-term growth outlook. The board concluded that proceeding with the offer was not in the best interests of the company and its shareholders. Firmus is backed by Nvidia, Coatue Management, Blackstone and Jane Street. The offer would have been the second-largest new share sale in Australia's history.

Pricing and valuation

The IPO was planned at A$11 per share, which would have given Firmus an equity valuation of $30.6 billion, Reuters reported. That figure is nearly triple the $10.5 billion valuation reached in a fundraising round at the start of August. The Guardian cited an anticipated valuation of $44bn and described the offer as the biggest ASX listing since Telstra in 1997. Local media reports cited by Reuters said Firmus and its advisers were contemplating cutting the size of the offer and lowering the price to A$8.25 per share on Thursday. Emanuel Ajay Datt, managing director of fund manager Datt Group, said a cut to A$9 from A$11 would reduce the value of Maas Group's holding by about A$75 million.

Timeline

Bookbuilding closed on Thursday, and potential investors were told in a term sheet that the joint active bookrunners would provide further information about the offer. The initial term sheet had said indicative offers were already above the size of the deal. Some potential investors told Reuters they were cautious about the company's valuation, its ability to execute on ambitious growth plans and its hefty debt pile. Demand from overseas investors was weaker than expected, according to reports cited by Reuters.

Maas Group and the ASX

Maas Group, a construction services provider, saw its shares close down 22.4% on Thursday after falling as much as 30% in intraday trading. The stock was at its weakest level since May 6, and the company lost about A$517 million in market value, leaving it valued at A$1.79 billion. The Australian Securities Exchange questioned Maas over the share price plunge. In an exchange filing, Maas said speculation over whether the IPO would proceed had weighed on sentiment, and that it was not aware of any undisclosed information that would explain the trading. Datt described the selloff in a comment to Reuters.

The selloff reflects a legitimate derating of the embedded value of its Firmus stake, but the magnitude is overdone

Sector signal

Reuters called the lukewarm demand a warning sign that investors remain selective about AI issuers, even as the artificial intelligence boom drives global markets. Bloomberg described the expected postponement as an ominous sign for other proposed listings, coming after a string of disappointing debuts for AI infrastructure firms. Sentiment towards AI had shifted sharply in recent weeks, with concerns over high valuations broadening to worries that the technology is slipping out of human control. Firmus currently has two AI factories online, in Melbourne and Singapore, and five more are planned across the Asia-Pacific in early stages of development.

What comes next

Firmus said it will provide additional information to shareholders as its alternative options progress. Bloomberg reported that the company is in talks with existing investors and others for a private funding round. The company's statement said the offer terms did not correctly reflect its long-term growth outlook. The outcome of those private talks has not yet been reported.