AI data centre IPO hits a wall: Why Firmus pulled its $5 billion listing

Nvidia-backed data centre operator Firmus has shelved its planned $5 billion initial public offering (IPO) after investor demand weakened, raising fresh questions about the valuations and financial risks behind the artificial intelligence boom.

The Australian company had planned to sell shares at A$11 each, valuing its equity at $30.6 billion. It will now pursue private fundraising and may consider an international stock market listing later, according to its founders and a person involved in the transaction. The withdrawal is a setback for Australia’s stock market and a sign that investors are becoming more selective about companies seeking to profit from the rapid expansion of AI infrastructure.

Why did Firmus pull its $5 billion IPO?

Firmus faced concerns over its valuation, debt and limited track record in building AI data centres. The company was valued at $10.5 billion after a fundraising round in August. Its proposed IPO valuation was nearly three times that figure just weeks later.

Analysts associated with the deal put its debt at about $30 billion, giving it an estimated enterprise value of $60 billion. Investors also questioned whether the company could deliver its ambitious expansion plans. The situation worsened after CDC Data Centres chief executive Greg Boorer said the planned development of 1.6 gigawatts of AI factories with Firmus was no longer proceeding, according to people involved in the IPO.

Nvidia-backed AI company turns to private funding

Founded in 2019, Firmus designs and operates modular AI data centres using its own energy and cooling technology. Its investors include Nvidia, Coatue Management, Blackstone and Jane Street. The company currently operates two leased data centres in Melbourne and Singapore and plans to build five more across the Asia-Pacific region.

Its draft prospectus projected annual earnings of $5 billion within five years. However, investors were being asked to pay a high price for future growth that still depends on execution. Firmus co-founders Oliver Curtis and Tim Rosenfield said the company would now seek capital from private markets and assess alternative international listing options. Bloomberg has reported that Firmus was exploring raising up to $3 billion from existing investors, although the company declined to comment on its funding plans.

Is this a warning sign for the AI boom?

The failed IPO does not necessarily mean investors are abandoning AI. But it highlights growing scrutiny of the cost of building data centres and the ability of companies to turn massive infrastructure spending into sustainable profits.

Fund manager Jun Bei Liu described the episode as a reality check for AI investment, while cautioning against treating it as the end of the sector’s growth.

For Firmus, the next challenge is securing fresh capital and proving that its expansion plans can deliver the returns investors expect.