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An Nvidia-backed data center operator has abandoned plans for what would have been one of the world’s biggest listings this year, a sign of growing investor wariness of high AI valuations.
Firmus, which aimed to raise $5 billion at a valuation of $30 billion, announced on Friday that it had withdrawn its application for a Sydney listing in light of “recent market volatility and current market conditions”.
“The board of directors has determined that the terms under which the offering could be consummated would not adequately reflect the strength of the company’s business and its long-term growth prospects,” Firmus said.
Firmus has struggled to convince investors to buy into the target-priced IPO, highlighting concerns over ambitious AI funding and whether valuations align with the sector’s outlook.
The listing would have been Australia’s largest since telecommunications operator Telstra made its $10 billion debut in 1997.
A person familiar with the matter said the Australian company would instead seek to raise capital through a private funding round.
“Firmus is probably one of the most polarizing IPOs I’ve ever seen,” said Jun Bei Liu, founder of asset manager Ten Cap. “They could generate lower profits in two years if they deliver on what they promise, but that remains speculative.”
Firmus was founded in 2019 as a Bitcoin miner in Australia before moving into data center services. It has ambitions to build “AI factories” using chips from Nvidia, which participated in a funding round in August that valued Firmus at more than $10.5 billion.
The company is also backed by global investors including Jane Street and funds managed by Blackstone.
Although Firmus has signed contracts for more than 900 megawatts of capacity, the company only has 46 megawatts in operation at two facilities in Australia and Singapore. Five data centers are under construction, with the aim of beginning operations within the next two years.
“We believe that Firmus does indeed have a compelling story; its valuation is simply not compelling,” John Pearce, chief investment officer of Australian pension fund UniSuper, said in an investment update released on Thursday before Firmus withdrew its IPO.
“It takes a lot to justify the valuation. Additionally, we are very concerned that Firmus will have to continue to return to the market to obtain significantly more debt and more equity to finance its expansion plans,” he added.
In recent months, some of the biggest AI companies have warned of the technology’s existential risks and called for a slowdown in development. Globally, there is also dissatisfaction with data centers and the resources needed to power them.
Rising interest rates have increased pressure on AI companies, which rely heavily on debt to fuel their infrastructure buildout.
Higher borrowing costs have made government bonds more attractive, meaning “investors can demand more reasonable valuations” from technology companies, said Jason Lui, head of Asia-Pacific equity and derivatives strategy at BNP Paribas.
“Investors will need more evidence on the growth prospects of these companies,” he said. “The opportunity cost is higher.”
Additional reporting by Nic Fildes in Melbourne
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