Nvidia-backed Australian data center operator Firmus has shelved its planned $5 billion initial public offering, citing market volatility and related market conditions, and said it will pursue a private funding round instead.
Firmus's IPO plan would have been the second-largest share sale in Australian history, but market demand responded tepidly — a sign that investors remain cautious when selecting AI-related issuers, even as the artificial intelligence boom drives global markets.
In a statement, Firmus said it would instead seek funding from private markets and consider other alternatives in both public and private markets; the company noted that the terms failed to accurately reflect its business strength and long-term growth prospects. The statement said: "Accordingly, the board has determined that proceeding with the offer would not be in the best interests of the company and its shareholders."
The company had originally planned to sell shares at A$11 per share, which would have valued Firmus's equity at A$30.6 billion — nearly three times its A$10.5 billion valuation after a funding round in early August.
Firmus is backed by major AI companies and investment institutions including Nvidia, Coatue Management, Blackstone, and Jane Street; the company uses proprietary energy and cooling technology to design and operate modular AI factories.
Currently, the company has only two factories in operation, in Melbourne and Singapore; another five planned factories in the Asia-Pacific region are still in early stages of development.
"I think the Firmus case is an important warning about the AI investment boom, but I would not interpret it as the beginning of the end for the AI trade," said Liu Junbei, co-founder of fund management company Ten Cap, who has been critical of Firmus's IPO.
"Firmus does have some unique problems, particularly regarding the pace of its valuation growth, its massive capital requirements, and the execution risk of achieving its ambitious expansion plans."
Liu said a broader trend is emerging: investors are becoming more cautious. In the latest sign of heightened investor anxiety, U.S.-listed chipmakers (components of the Philadelphia Semiconductor Index) fell 3.4% on Thursday. This followed reports that OpenAI's annualized revenue was $20 billion lower than the company had previously indicated.
According to analyst estimates from the IPO's joint lead underwriters, Firmus carries approximately $30 billion in debt, implying an enterprise value of about $60 billion. If the deal had proceeded, the company — founded in 2019 — would have been valued higher than some of Australia's oldest enterprises.
In the term sheet issued at the launch of the deal, it was mentioned that indicative subscriptions for the IPO were sufficient to cover the deal size. However, potential investors said they were skeptical of the company's rapidly inflating valuation, its ability to execute its ambitious growth plans, and its heavy debt burden.
In a draft prospectus, Firmus said its data center portfolio would generate $5 billion in annual revenue within five years, but most of those data centers have not yet been built. On Tuesday, investors learned of the deal's escrow arrangements — which would allow existing investors to begin selling more than half their shares on the proposed first trading day — raising further concerns about Firmus's sharp valuation surge.