Firmus float in trouble as investors don’t buy the hype

Australian data centre start-up Firmus’ plans for a $44 billion sharemarket listing are on life support after investors baulked at the price, with its bankers scrambling to stop the public offering from being called off.

Institutional investors were due to submit their bids for shares, initially priced at $11, by Thursday at 9am, according to emails seen by this masthead.

But despite Firmus initially projecting huge confidence that demand would outstrip supply, multiple outlets have reported that investors had refused to buy at that price and shares were being offered around $8 instead on Wednesday, in a last-ditch attempt to save the IPO.

They were worried, in part, that existing shareholders could flood the market soon after the company’s debut, according to people familiar with the matter.

The overhang is adding to concerns over what some investors see as an aggressive pricing strategy for the deal, said some of the people, who asked not to be identified as the deliberations are private.

Firmus was co-founded by Oliver Curtis, the husband of public relations consultant and influencer Roxy Jacenko. He served time for insider trading some years before Firmus was founded in 2019.

The company is building data centres to train AI tools and has a multibillion-dollar set of planned facilities, but only two are operational. However, the company had still priced the IPO at $11 a share, implying a valuation of about $43.7 billion ($30.3 billion). That is close to major established Australian companies such as Woolworths.

More than half of the existing shares will be available to sell as soon as the company lists, according to terms of the deal seen by Bloomberg.

Escrow agreements will restrict trading in 42.4 per cent of the shares, including part of the holdings of the data centre company’s founders and their family members and other shareholders, leaving 57.6 per cent of the shares to freely change hands when the company floats later this month in Australia, the terms show.

Firmus was contacted for comment on the reports the IPO could fail, which first appeared in the Australian Financial Review and The Australian.

The concern about the stock overhang underscores the divided sentiment over the deal. Some investors see the business as well-placed to benefit from the artificial intelligence boom, while others are worried about its valuation and ambitious spending plans.

Shares held by major existing backers, including Nvidia, US fund manager Blackstone and tech investor Coatue Management, aren’t subject to the escrow restrictions, according to a person familiar with the deal.

The company has inked a number of large deals with high-profile clients as it seeks to capitalise on artificial intelligence demand.

With Bloomberg