Nvidia-backed Firmus withdraws planned ASX listing, citing market volatility

Firmus, an Australian operator of AI data centres backed by Nvidia, has pulled its planned initial public offering on the ASX. In a statement emailed to CNBC, the company pointed to recent market volatility and conditions. Its board decided that the proposed terms did not adequately capture the strength of the business or its long-term growth prospects, and concluded that continuing with the offer would not serve the company or its shareholders. According to Data Center Dynamics, the listing had been scheduled for October 23.

CNBC says Firmus had reportedly aimed to raise $5 billion at A$11 per share, which would have valued it at around $30.6 billion and made it the second-largest new share sale in Australian history. The BBC put the valuation at more than $30bn. ABC News reported that the co-founders and co-chief executives, Oliver Curtis and Tim Rosenfield, had targeted a $44 billion valuation, and said the float would have been the country's biggest since Telstra in 1997. The terms were already under pressure: Data Center Dynamics reported on Wednesday that the starting price had been lowered from AU$11 to AU$9 because of weak interest from domestic and overseas investors, while ABC News said earlier reports pointed to a smaller offer and a possible cut from $11 to $8.25 a share.

The company now plans to turn to private investors. “Firmus will now pursue capital from the private markets and consider alternative public and private market options”, it said. According to CNBC, Nvidia, Coatue Management, Blackstone and Jane Street backed a $2 billion round that Firmus announced in August, taking its valuation above $10.5 billion. ABC News reports that Nvidia holds a 7.2 per cent stake. Data Center Dynamics says Firmus has agreements with Meta and OpenAI to supply data centre capacity in Indonesia and Malaysia. Its website lists seven sites across Australia, Singapore, Indonesia and Malaysia, two of them operational, ABC News reports.

Some institutional investors had voiced doubts before the decision. UniSuper, which the BBC describes as one of Australia's largest pension funds, chose not to take part. Its chief investment officer John Pearce said in an investor update: “We think that Firmus indeed has a compelling story. It just doesn't have a compelling valuation”. He also said he was concerned the company would need to keep coming back for more debt and equity. Morningstar strategist Lochlan Holloway warned that neocloud companies are heavily geared. ABC News reports that Firmus expects to carry about $US30 billion of debt once its data centres are built, roughly six times the operating earnings of $US5 billion that it projects for 2028. ABC News also reported that many investors focused on Mr Curtis's past: he served one year in prison for insider trading about a decade ago.

The withdrawal follows another setback. Data Center Dynamics reports that Firmus had reportedly ended Project Southgate, a partnership with CDC Data Centres that could have produced 1.6GW of capacity in Australia. According to DCD, just 43MW had been built under the deal, and Firmus seemingly intends to keep building without CDC. Phillip Wool, chief research officer at Rayliant Investment Research, told the BBC that buyers of Firmus shares would be backing an early-stage company likely to need large loans, describing it as “more like a bet on a dream”.