Artificial intelligence (AI) data centre company Firmus has canceled its plans for a stock market listing that would have been one of Australia's largest. The Nvidia-backed firm stated that the decision was due to "recent market volatility and prevailing market conditions," indicating that going public would not be in the best interests of the company or its shareholders. Initially, Firmus aimed for a valuation exceeding $30 billion (£22.65 billion) at its debut.
An investment firm informed the BBC that it opted not to participate in the initial public offering (IPO) due to concerns regarding Firmus's valuation. The company announced, "Firmus will now pursue capital from the private markets and consider alternative public and private market options. We will provide additional information to shareholders as those options progress."
Firmus specializes in building and operating liquid-cooled data centres, referred to as "AI factories," for clients such as OpenAI and Meta. The company has operations in Australia, Singapore, and other regions within the Asia-Pacific.
Backers of Firmus include Nvidia, Blackstone, and Jane Street. Blackstone declined to comment, while Nvidia and Jane Street were also contacted for remarks.
The cancellation of the stock market listing follows growing concerns from investors and analysts about the substantial investments in AI, with uncertain long-term returns. UniSuper, one of Australia's largest pension funds, chose not to participate in the IPO, with Chief Investment Officer John Pearce stating, "We think that Firmus indeed has a compelling story. It just doesn't have a compelling valuation." He expressed concerns that Firmus might need to incur more debt to support its growth plans, adding, "It's disappointing. The [Australian Securities Exchange] needs new stories and this could have been one if it was correctly priced."
Phillip Wool, Chief Research Officer at Rayliant Investment Research, noted that this type of listing tests companies' willingness to continue investing in AI, suggesting that investing in Firmus would be akin to betting on a dream due to its early-stage status and potential need for significant borrowing.
Australia is becoming an appealing location for data centre investments, attributed to its clean energy resources, natural gas supplies, and available land. OpenAI's CEO Sam Altman remarked earlier this year that Australia could emerge as a global leader in the data centre sector if it chose to pursue that path. Currently, there are over 160 data centres in Australia, with plans for additional facilities, despite some public resistance regarding environmental impacts and noise.
In September, Altman indicated that OpenAI would not aim to go public this year, citing safety concerns about the technology as reasons for delaying a stock market debut. Both OpenAI and rival Anthropic have been considering significant stock market listings that could value their firms at over $1 trillion each. AI-related stocks, including Nvidia and Oracle, experienced declines in US trading following reports that OpenAI's revenues were lower than anticipated.