Firmus Technologies, a data centre company, is encountering difficulties ahead of its planned $44 billion initial public offering (IPO) on the Australian Securities Exchange (ASX), set for October 23. Concerns among investors have grown due to the company's high debt levels and a rapid increase in valuation.
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Although the IPO was anticipated to be the largest since Telstra in the 1990s, it is currently not listed on the ASX's upcoming floats webpage. Analysts have raised alarms about Firmus's financial health, noting a significant increase in its valuation from $6.9 billion in April to about $15.5 billion now. Investment banks halted the bidding process for the IPO, and Goldman Sachs is reportedly being brought in to assist.
Fund manager Roger Montgomery pointed out discrepancies in the communications regarding the IPO, highlighting that investors were previously told that indicative orders had exceeded the offering size at $11 per share. He questioned why the price might now be lowered if that were indeed true.
The ASX stated it does not comment on individual companies but advised that its listing webpage reflects formal applications, which Firmus has yet to submit. There are reports that the share price might drop to around $8 due to lackluster interest during the IPO roadshow.
Firmus, described as a neocloud technology company, is looking to raise funds for new data centres, including an AI factory in Launceston, with further expansion planned across Australia and Southeast Asia. However, a recent $73 billion partnership conclusion with another data centre firm and community objections to proposed projects have also raised red flags for investors.
Portfolio manager Jun Bei Liu expressed her reluctance to participate in the IPO due to concerns about the company's lack of detailed disclosures and the significant risks involved. She noted that 97 percent of the promised data centre capacity is yet to be completed, while Morningstar strategist Lochlan Halloway emphasized the potential dangers of the company's increasing debt burden.
Research indicates that Firmus's projected energy consumption could position it as Tasmania's largest energy consumer, with its three planned centres requiring approximately 444 megawatts of power. This necessitates additional infrastructure investment, raising further questions about demand forecasts and commitments from customers.
As Firmus prepares for its upcoming float, significant uncertainties cloud its financial future.