Firmus Grid Ltd. abandoned its attempt at one of Australia’s biggest-ever initial public offerings, after the Nvidia Corp.-backed data center company failed to lure global investors who’ve grown increasingly skittish over frothy AI valuations.
It was a dramatic about-face for a company that just days ago was signaling healthy demand for a deal that would have valued it at $30 billion, up from $10.5 billion less than three months ago. The cancelled deal is a stark example of investor pushback against AI financing terms that some worry have become too generous as global borrowing costs climb and the long-term payoff from the technology remains uncertain.
Firmus, whose business model hinges on a steady influx of fresh capital, will withdraw its application to list on the Australian Securities Exchange and consider other funding options, according to a statement Friday, which confirmed an earlier Bloomberg News report · .
“Having considered recent market volatility and prevailing market conditions, the board determined that the terms on which the offer could proceed would not appropriately reflect the strength of the company’s business and long-term growth outlook,” it said.
The IPO showed signs of stress soon after books opened for institutional investors this week. The struggles underscored investors’ polarized views on the deal. Some saw the business as well placed to benefit from the artificial intelligence boom, while others are worried about the valuation and existing shareholders potentially flooding the market soon after the debut. Part of the difficulty was convincing potential investors of the steep increase in market value for a company without a proven track record that had revenue of $51 million in the 2026 financial year.
Firmus, which was looking to raise as much as $5.5 billion including a greenshoe option, must now find other ways to raise funds to keep its ambitious expansion plans on track. The company aims to build data centers it calls AI factories using hardware from backer Nvidia. It has a pipeline of 912 megawatts, of which only 46MW has been built, according to investor documents seen by Bloomberg.
“Investors just weren’t prepared to pay a sky-high price up front for capacity that’s still largely on the drawing board,” said Josh Gilbert, lead analyst for APAC and Middle East at eToro. “The timing hasn’t helped either, with higher yields lifting borrowing costs and shrinking what investors will pay today for earnings that sit years down the track.”
Read More: Nvidia-Backed IPO’s Cratering Demand Sends Warning on AI Funding ·
The company said it will now pursue capital from the private markets and consider alternative public and private market options. Firmus will also explore a potential listing in the US in the longer term, people familiar with the matter have said.
The failed deal underscores growing concern over how much capital AI infrastructure companies are demanding from public markets at a time when borrowing costs are rising. Much of Firmus’ valuation was based on the company successfully building a pipeline of data centers across Asia serving customers such as Meta Platforms Inc. and OpenAI.
The strain is spreading · across credit markets in the US, where a record wave of AI-related borrowing is forcing investors to reassess the risks around some of the biggest technology companies. Nearly $500 billion of new debt has been priced this year to fund AI infrastructure, while rising financing needs and interest rates have driven up credit-insurance costs and weakened tech debt performance.
“There’s no question investors feel more anxiety recently, as the tech sector rallies despite mounting risk on every other front,” Phillip Wool, head of portfolio management at Rayliant Global Advisors, wrote in a Linkedin post. “Everything at this point hinges on the virtuous cycle of AI infrastructure spending boosting hardware and hyperscalers’ AI investment exciting shareholders about their own future earnings growth.”
UniSuper, one of Australia’s biggest pension funds, was among institutional investors that didn’t take part in the IPO process.
“We think that Firmus indeed has a compelling story. It just doesn’t have a compelling valuation,” Chief Investment Officer John Pearce said in an investor update published Thursday. “So much has to go right to justify the valuation.” The fund was also concerned that Firmus would have to continue to raise debt and equity to fund its expansion plans, he said.
The IPO’s collapse is an ominous sign for other proposed listings, coming after a string of disappointing debuts for artificial intelligence infrastructure firms.
The so-called neoclouds that investors are comparing many of these companies to, such as CoreWeave Inc. and Nebius Group NV, are among the most leveraged and volatile AI stocks, said Dave Mazza, chief executive officer of Roundhill Investments.
“The bear case is having a moment, because the cost of capital has become unhinged and equities with long duration are taking a hit, so the set up in the short term is challenging,” Mazza said.
Several companies have already dragged their feet after publicly filing their paperwork with the US Securities and Exchange Commission, which requires that companies wait 15 days before kicking off formal IPO marketing. Though AI cloud computing provider Nscale Ltd. and SoftBank Group Corp.-backed AI data center and power infrastructure developer SB Energy Inc. filed for US listings last month, they have yet to start marketing their respective deals.
Singapore-based DayOne Data Centers Ltd. filed publicly for a US IPO earlier this week, and can begin formally pitching to investors on Oct. 21 based on the calendar.
All are looking to find an opening while investors await the potential mega-listing of frontier AI lab Anthropic PBC as early as November, people familiar with the matter have said.
“Markets are nervous and want more than the promise of future bookings to justify valuations,” said Kirk Boodry, a Bloomberg Intelligence analyst. “ Firmus isn’t the first, SoftBank’s SB Energy was supposed to list in September with backing from Nvidia and OpenAI. Indications that the latter’s annual recurring revenue is lower than expected doesn’t help as the explosion in data center capacity needs accelerating AI platform revenue growth to make sense.”
Firmus began as a Bitcoin mining operation in Australia in 2019 and has benefited from surging demand for AI infrastructure across Asia, with a pipeline of data center projects in Australia and Singapore.
Proceeds from the listing would have funded purchases of graphics processing units for its first data center project in Batam, Indonesia, being developed with DayOne, as part of an eight-year partnership with Nvidia.
Firmus has inked a number of large deals, securing $2 billion in commitments from investors including Nvidia and Blackstone Inc. Other existing shareholders include Jane Street, while Firmus also raised $505 million in a Coatue Management-led funding round in April.
Bank of America Corp., JPMorgan Chase & Co., Morgan Stanley and Morgans Financial Ltd. were acting as joint lead managers on the listing.