Firmus’ planned $44 billion initial public offering has been thrown into doubt after institutional investors baulked at the proposed price, prompting its bankers to cut the offer from $11 to about $8 a share.
The Australian data centre start-up had been expected to secure bids from investors by 9am on Thursday. But with demand weakening, the company and its advisers were considering whether to withdraw the float, reduce its size further or change the terms of the deal.
At $11 a share, Firmus would have been valued at about $43.7 billion, putting the listing among the largest in Australian market history and close in value to established companies such as Woolworths.
People familiar with the discussions said investors were concerned that a large proportion of existing shareholders could sell soon after Firmus began trading. They also questioned what they regarded as an aggressive valuation for a business with only two operational data centres.
Firmus IPO faces divided investor reaction
More than half of the company’s shares could be freely traded at the time of the listing. Escrow arrangements cover 42.4 per cent of the stock, including some holdings belonging to Firmus’ founders, their families and other shareholders, while major existing backers are not subject to those restrictions, according to a person familiar with the deal.
Firmus has promoted the offering on the expectation that demand would exceed supply, but investor opinion has been sharply divided. Some see the company as a beneficiary of the boom in artificial intelligence, while others remain wary of its valuation and ambitious spending plans.
“I’ve never seen an IPO so polarising,” Jun Bei Liu, co-founder and lead portfolio manager at Ten Cap Investment, said on Bloomberg TV.
“There was a lot of international investor interest, however, when it comes to the crunch, the demand seems like it isn’t there when they were asked to put up the capital that’s required.”
Firmus is building data centres to support the training of artificial intelligence systems and has agreements with major technology companies including Meta and OpenAI. It is also working on a multibillion-dollar programme of planned facilities.
The company was co-founded by Jonathan Levee, Tim Rosenfield and Oliver Curtis, who is now co-chief executive. Curtis served a year in prison between 2016 and 2017 after being convicted of insider trading, before co-founding Firmus as a bitcoin mining business in 2019.
Its backers include Nvidia, which has provided financing, supplies chips and owns a 7.2 per cent stake. Blackstone and Coatue Management are also significant investors, while Australian shareholders include James Packer, former treasurer Joe Hockey, Alex Waislitz, Ellerston Capital and Regal Partners.
Shares in Maas Group, which owns 3.2 per cent of Firmus and has contracts to help build its facilities, fell by as much as 30 per cent as concerns over the float emerged. Shares in Goodman Group and NextDC, two other Australian data centre businesses, were not caught up in the sell-off.
Bank of America, JPMorgan Chase, Morgan Stanley and Morgans Financial are acting as joint lead managers for the proposed listing. Firmus declined to comment on reports that the IPO could fail.
