Australian AI data center operator Firmus has withdrawn its planned initial public offering, stating that market conditions did not reflect its business strength. The company will now pursue private funding options.
Australian AI data center operator Firmus, backed by Nvidia, has withdrawn its planned mega initial public offering. The company cited market volatility and conditions as the primary reasons for the decision in an emailed statement to CNBC.
Firmus stated that its board determined the terms of the proposed offering did not adequately reflect the strength of its business and long-term growth outlook. "The board therefore concluded that proceeding with the offer was not in the best interests of the company and its shareholders," Firmus said in a statement. The company added that it "will now pursue capital from the private markets and consider alternative public and private market options."
The company had reportedly planned to raise $5 billion in its IPO, pricing shares at A$11 apiece. This offering would have valued the company at around $30.6 billion, making it the second-largest new share sale in Australia’s history. This valuation was nearly triple the company's valuation in August.
In August, Firmus announced a $2 billion funding round backed by Nvidia, Coatue Management, Blackstone, and Jane Street. This round brought its total equity raised over the preceding year to more than $3 billion and its valuation to over $10.5 billion. Last month, Firmus also announced agreements with Meta to provide GPU computing capacity at its AI data centers in Southeast Asia, built on Nvidia’s DSX platform, to support Meta’s AI research, model development, and training.
Reports indicate that prospective investors expressed concerns regarding the high initial share price of $11. Some investors were apprehensive about an apparent AI bubble and the high valuation Firmus aimed to achieve. It was reported that the company and its advisors were considering lowering the IPO price to $8.25 in light of the lukewarm response.
Scrutiny also focused on Co-CEO Oliver Curtis’s criminal history, which includes a year-long prison sentence for insider trading a decade ago. Additionally, institutional investors voiced skepticism. UniSuper’s chief investment officer, John Pearce, released an investment update highlighting reservations about investing in Firmus at its proposed valuation. Pearce described the situation as being "priced to perfection," indicating that numerous factors needed to align for the company to justify its valuation.
Morningstar market strategist Lochlan Holloway raised concerns about Firmus’s debt levels. He noted that the neo-cloud model, which involves borrowing against customer contracts to finance infrastructure, could lead the company to carry around $30 billion in debt while forecasting only $5 billion in operating earnings by 2028.
The withdrawal of Firmus's IPO highlights the challenging environment for AI infrastructure companies seeking public capital. This decision reflects broader caution among investors regarding AI-focused companies and the sustainability of high valuations in the sector. As global markets grapple with uncertainty around interest rates and geopolitical tensions, companies like Firmus may need to rely on private markets or strategic partnerships while waiting for public market conditions to improve.
Sources
This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.
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