The demand for the initial public offering (IPO) of Firmus Grid Ltd., backed by Nvidia, has sharply declined, highlighting potential instability in AI funding. The Australian company's planned listing was set at $5.5 billion but struggled to generate sufficient interest at the targeted A$11 share price, according to sources familiar with the situation. This decline follows initial indications of interest that exceeded the offer size, suggesting a possible valuation of $30 billion.
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Firmus closed its order books on Thursday but has not clarified the pricing or overall structure of the deal, leading to speculation about potential price cuts or even cancellation of the IPO. Analysts express growing apprehension regarding the demands for capital from AI infrastructure companies amid rising borrowing costs.
Most of Firmus' projected value hinges on its ability to construct a network of data centers across Asia, catering to clients like Meta Platforms Inc. and OpenAI. Currently, the company operates only two data centers, making the funds from the IPO essential for developing its broader infrastructure.
Maxence Visseau, the chief investment officer at investment firm Arkevium Capital, noted that while investors remain optimistic about AI, they are reluctant to pay high prices for companies that heavily invest in data centers, rely on a limited customer base, and project profits far into the future. Investors have raised concerns about Firmus, citing its shaky track record, high valuations, and the significant proportion of shares—approximately 58%—that would be available for trading immediately after listing.
Increased regulatory scrutiny and more stringent financing conditions for data centers have also been identified as factors contributing to investors' wariness. Requests for comments from Firmus representatives went unanswered, and prominent institutional participants, including UniSuper, opted not to invest in the IPO.