Firmus, an AI data centre company backed by Nvidia, has decided to cancel its plans for a major stock market listing in Australia. The decision was attributed to "recent market volatility and prevailing market conditions, " which the company said would not serve the best interests of its shareholders.
The proposed initial public offering (IPO) was expected to value the company at over $30 billion, making it one of the largest in Australian history. However, concerns about the valuation led some investment firms to opt out of participating. Firmus has now shifted its focus to securing capital through private markets and exploring other public and private market options.
Firmus specializes in building and operating liquid-cooled data centres, referred to as "AI factories, " for high-profile clients such as OpenAI and Meta. The company operates across Australia, Singapore, and other parts of the Asia-Pacific region. Among its backers are major investment firms Blackstone and Jane Street, though both declined to comment on the IPO cancellation.
The decision to scrap the listing comes amid growing skepticism among investors and analysts about the vast sums being invested in AI, with long-term returns still uncertain. UniSuper, one of Australia's largest pension funds, was among those who chose not to participate in the IPO. John Pearce, UniSuper's chief investment officer, expressed concerns about Firmus's valuation and the potential need for the company to incur more debt to fund its growth plans.
"It's disappointing, " Pearce remarked, noting that the Australian Securities Exchange (ASX) could benefit from new stories like Firmus, provided they are correctly priced. He emphasized that while Firmus presents a compelling narrative, its valuation does not match its story.
Phillip Wool, chief research officer at Rayliant Investment Research, described the listing as a test of the willingness of companies to continue investing heavily in AI. He noted that investing in Firmus would be akin to "a bet on a dream, " given its early-stage status and likely need for significant borrowing.
Australia's Data Centre Landscape
Australia has emerged as a favorable location for data centre investments, thanks to its abundant clean energy resources, natural gas supplies, and available land. OpenAI CEO Sam Altman has previously suggested that Australia could become a global leader in the data centre industry. The country currently hosts over 160 data centres, with more planned, despite environmental and noise concerns from some residents.
In September, Altman stated that OpenAI would not pursue a stock market listing this year, citing safety concerns with the technology as a reason to delay going public. Meanwhile, AI-related stocks such as Nvidia and Oracle experienced declines in US trading on Thursday, following reports of lower-than-expected revenues for OpenAI. This development adds to the uncertainty surrounding the AI sector, as investors weigh the potential risks and rewards of investing in this rapidly evolving field.
