Firmus Stock Overhang Said to Make Some Investors Wary on IPO

Some potential investors are turning more cautious on the blockbuster initial public offering of data center firm Firmus Grid Ltd. as they worry about existing shareholders potentially flooding the market soon after the company’s debut, according to people familiar with the matter.

The overhang is adding to concerns over what some investors see as an aggressive pricing strategy for the deal, said some of the people, who asked not to be identified as the deliberations are private. Firmus priced the IPO at A$11 a share, implying a valuation of about A$43.7 billion ($30.3 billion).

More than half of the existing shares will be available to sell as soon as the company lists, according to terms of the deal seen by Bloomberg. Escrow agreements will restrict trading in 42.4% of the shares, including part of the holdings of the data center company’s founders and their family members and other shareholders, leaving 57.6% of the shares to freely change hands when the company floats later this month in Australia, the terms show.

Firmus declined to comment.

The concern about the stock overhang underscores the divided sentiment over the deal. Some investors see the business as well placed to benefit from the artificial intelligence boom, while others are worried about its valuation and ambitious spending plans.

Firmus is seeking to raise as much as $5.5 billion, including a greenshoe option, in one of Australia’s largest-ever IPOs. The close of the bookbuilding process was moved up to Thursday from Friday, the terms showed. The company received indications from investors well in excess of the offer size and plans to allocate about half of the IPO shares to existing shareholders, people familiar with the matter have said · .

Shares held by major backers Nvidia Corp, Blackstone Inc. and Coatue Management LLC aren’t subject to the escrow restrictions, according to a person familiar with the deal.

The company has inked a number of large deals with high-profile clients as it seeks to capitalize on artificial intelligence demand. It secured $2 billion in commitments from investors including Nvidia and Blackstone. Other existing shareholders include Jane Street, while Firmus also raised $505 million in a Coatue-led funding round in April.