Firmus Struggles to Attract Investors as $44 Billion IPO Comes Under Pressure
Weak investor interest is forcing Australia’s proposed mega data centre float to reconsider its valuation ahead of its planned ASX debut
Firmus Technologies’ planned $44 billion ASX listing is facing growing pressure after investor interest in the data centre operator failed to meet expectations. The company's IPO bookbuild has now closed, leaving investment banks to determine the final offer price ahead of Firmus' planned October 23 debut.
Firmus had been expected to list at around $11 a share, but reports suggest the offer could be repriced as low as $8, reflecting weaker-than-expected demand from investors. The company had been targeting a valuation above $50 billion, making it one of Australia's largest proposed share market floats in decades.
Investors question valuation and debt
Firmus operates so-called neocloud data centres, which are designed to provide the computing capacity required to train and run artificial intelligence models. The company is seeking significant capital to build an AI factory in Launceston and develop two additional facilities in Tasmania, with broader expansion plans across Australia and South-East Asia.
However, investors have raised concerns about the level of detail provided during the company's IPO roadshow, as well as its debt requirements and substantial energy needs.
Ten Cap portfolio manager Jun Bei Liu said she was avoiding the IPO, describing Firmus as a high-risk proposition. She also questioned the amount of capacity that has actually been built compared with the company's longer-term commitments.
Firmus is reportedly seeking up to $7 billion from institutional and retail investors, adding to the importance of securing sufficient demand before the listing.
Debt and energy requirements add to uncertainty
The company's funding structure has also attracted attention. Morningstar senior market strategist Lochlan Halloway said the valuation surge and debt profile showed characteristics often associated with the late stages of investment booms.
Firmus' valuation reportedly increased from around $6.9 billion in April to $15.5 billion, even before its planned public listing.
Halloway also pointed to the company's expected debt burden. Once its planned data centres are built, Firmus expects to carry around US$30 billion of debt, compared with forecast operating earnings of approximately US$5 billion in 2028.
The scale of its infrastructure plans also means significant electricity requirements. Firmus' three proposed Tasmanian data centres would require around 444 megawatts, potentially making the company the state's largest energy consumer if the projects proceed.
IPO comes amid booming AI investment
Firmus' difficulties come as investors continue to assess the enormous amount of capital being directed towards AI infrastructure. Data centre operators are benefiting from growing demand for computing capacity, but the sector also faces challenges around financing, electricity supply and long-term demand.
The proposed listing therefore provides investors with an opportunity to assess how much value public markets are willing to place on Australia's AI infrastructure boom.
What it means for investors
For investors, Firmus' IPO highlights the risks surrounding high-growth data centre businesses, particularly where valuations are rising rapidly while large amounts of debt and infrastructure investment are still required.
The final IPO price, investor demand and the company's ability to deliver its planned data centre capacity will be important factors to watch ahead of the October 23 ASX debut.
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