Firmus’ collapse at the final hurdle shows that even Nvidia’s backing cannot make public investors accept any price for an artificial intelligence story.
The Australian data-centre operator abandoned its roughly US$5 billion IPO on Friday after demand weakened, ending what would have been the country’s second-largest listing.
Firmus had marketed shares at A$11 each, implying an equity valuation of about US$30.6 billion, nearly triple the US$10.5 billion valuation attached to an August funding round.
The company blamed market volatility and said it would pursue private capital instead.
But investor comments suggest that investors had already priced in too much future growth before most of the infrastructure needed to deliver it was built.
Nvidia gave Firmus credibility, but valuation demanded perfection
Firmus arrived with heavyweight supporters. Nvidia, Blackstone, Coatue Management, and Jane Street are among its backers, and the AI boom has driven demand for data centres and power.
That was not enough to overcome the price.
UniSuper chief investment officer John Pearce said in an investment update that Firmus had “a compelling story” but “doesn’t have a compelling valuation”.
He added that the company was “priced to perfection”, with too much needing to go right for the proposed valuation to make sense.
That concern became harder to ignore because the valuation had moved so quickly. In less than two months, Firmus went from roughly US$10.5 billion to a proposed US$30.6 billion equity value.
Blackwattle Investment Partners portfolio manager Joseph Koh, who reviewed the deal but did not bid, told Reuters that investors were being asked to pay a large price for future outcomes assuming “near flawless execution”.
Most of the revenue still depends on facilities being built
Firmus currently operates two leased data centres, in Melbourne and Singapore, and plans five more across the Asia-Pacific. Its draft prospectus projected about US$5 billion in annual earnings within five years.
That forecast is ambitious because much of the capacity underpinning it remains under development.
Minotaur Capital co-founder Armina Rosenberg told The Guardian that about 97% of contracted revenue was linked to sites that had not yet been built. “You only get near the offer price if delivery, financing and renewals all go to plan,” she said.
That leaves investors underwriting several risks at once, including construction timetables, access to power, financing costs, customer demand and contract renewals.
Any slippage could change the earnings profile materially.
Higher borrowing costs have changed AI financing debate
Long-term bond yields have risen sharply, increasing the cost of financing capital-intensive projects as investors become more demanding about returns from AI spending.
Firmus is expected to require additional debt and equity as it expands, a point Pearce highlighted when explaining UniSuper’s reluctance to participate.
The failed float also came as markets questioned the scale of funding being sought across the AI ecosystem.
Huge infrastructure programmes can create enormous value, but investors increasingly want evidence that spending will convert into durable cash flow.
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