The deal that did not happen
Firmus, the Nvidia-backed AI data centre operator, shelved its $5bn Australian initial public offering on Friday, citing market conditions. It would have been the second-largest share sale in Australia’s history.
“The board therefore concluded that proceeding with the offer was not in the best interests of the company,” the company said. It will “now pursue capital from the private markets and consider alternative public and private market options”.
The price
The offer was priced at A$11 a share, implying an equity valuation of about $30.6bn. Firmus completed a funding round at the start of August at about $10.5bn. Investors were being asked to pay close to three times that, nine weeks later.
Analysts for the IPO’s joint lead managers put the company’s debt at roughly $30bn, for an enterprise value of about $60bn. That is the figure that matters for an infrastructure business: the equity is the thin slice above a very large borrowing.
Why the book fell apart
Investors began withdrawing indicative orders on Wednesday. Joseph Koh, a portfolio manager at Blackwattle Investment Partners, which looked at the deal but did not bid, said the company was “asking for a very big price tag for what would likely be expected to happen in the future”.
Firmus considered cutting the share price to attract more orders and chose not to. That is a defensible call — repricing a deal mid-book sets the valuation for the next raise too — but it leaves the company funding its build-out privately at whatever the private market will bear.
The week it landed in
The timing is the story. The same week, a Financial Times report that OpenAI’s annualised revenue was about $20bn below the figure investors had been using knocked more than 1% off the Nasdaq and sent AI infrastructure shares down across the board.
Jun Bei Liu, co-founder of Ten Cap, called the pulled deal “an important reality check for the AI investment boom” while saying it was not the start of the end of the AI trade. Both halves of that are worth keeping. A failed book-build is a price disagreement, not a demand signal about compute.
What to watch
What Firmus raises privately, and at what valuation. A private round struck meaningfully below $30.6bn would say the public market was right about the price. One struck at or above it would say the listing failed on structure rather than on value — and investors had also balked at escrow terms that would have let more than half the stock be sold by existing holders from the first day of trading.
