Firmus Technologies has officially withdrawn its ambitious $44 billion initial public offering (IPO), a float that would have marked the second-largest listing ever on the Australian Securities Exchange (ASX), surpassed only by Telstra’s debut in 1997. The company, which operates in the artificial intelligence infrastructure sector, focuses on data centre solutions, aiming to capitalise on the burgeoning demand for AI computing power. Its business model involved leveraging significant debt to build out its facilities, which were estimated to have an eight-year useful life.
The decision to pull the IPO comes after a confluence of factors eroded investor confidence, particularly among crucial American institutional buyers. Brokers initially reported strong demand exceeding the $US5.5 billion offer size at an $11 share price. However, this interest quickly dissipated, with feedback indicating a loss of confidence that the IPO would perform well post-listing. Contributing to this unease were last-minute disclosure “curveballs,” including a new deal with Meta Platforms and the termination of a partnership with CDC Data Centres, alongside the limited availability of the prospectus.
Concerns were also raised regarding the structure of investor lock-ups; more than half of the company’s share register would have been free to sell immediately upon listing, reducing the incentive for new buyers to commit capital. Furthermore, Australian fund managers showed little interest beyond early backers, citing a management team without a proven track record, a high reliance on $US35 billion in debt funding, and a valuation of 12-times future earnings for assets with a relatively short estimated lifespan. While some external factors like widening credit spreads in debt markets were mentioned, the persistent strength in US equity markets and the performance of comparable NASDAQ-listed peer CoreWeave suggested the issues were more internal to Firmus.
