NVIDIA-backed data center firm cancels $5B IPO amid market volatility
What's the story
Firmus, an artificial intelligence (AI) data center company backed by NVIDIA, has called off its initial public offering (IPO) plans on the Australian Securities Exchange (ASX). The decision comes amid fears over the company's valuation and "recent market volatility." Firmus had reportedly aimed to raise $5 billion through the IPO, valuing the company at around $30.6 billion.
Information
Firmus to seek private capital
In light of the decision to scrap its IPO, Firmus is now exploring a private funding round of $2 billion to $3 billion and other options in public and private markets, according to Bloomberg. The company said it would update shareholders as these alternatives develop.
Business operations
Company serves clients such as OpenAI and Meta
Firmus, which calls its liquid-cooled data centers "AI factories," serves clients such as OpenAI and Meta.
The company operates in Australia, Singapore, and other Asia-Pacific countries.
Its investors include NVIDIA and leading investment firms Blackstone and Jane Street.
However, the decision to withdraw from the stock market listing comes amid fears over the massive investments in AI with unclear long-term returns.
Investor apprehensions
UniSuper's valuation concerns
UniSuper, one of Australia's largest pension funds, was among the institutional investors that opted out of the IPO.
Its chief investment officer John Pearce said, while Firmus has a compelling story, it doesn't have a compelling valuation.
He also expressed concerns that Firmus may have to take on more debt to fund its growth plans.
Investment landscape
Australia has over 160 operational data centers
Australia has emerged as a hotspot for data center investments, owing to its clean energy, natural gas resources, and land availability.
OpenAI's Sam Altman had earlier said that Australia could lead the world in the data center space if it wanted to.
Despite some Australians raising concerns over their environmental impact and noise pollution, there are currently over 160 operational data centers in the country with more planned.