Valuation doubts push Nvidia-backed Firmus to drop its US$5.5 billion ASX float

The person with the hardest Monday here is whoever is counting on GPU capacity in Batam, Indonesia. That project is Firmus's first data centre, developed with DayOne Data Centers as part of an eight-year partnership with Nvidia, according to Bloomberg ^[21]. Firmus is now discussing replacement money with existing investors and others, people familiar with the matter told Bloomberg ^[13].

What investors said during the offer and what they did with their money came apart. "I've never seen an IPO so polarising," Jun Bei Liu, co-founder and lead portfolio manager at Ten Cap Investment, said on Bloomberg TV ^[16]. "There was a lot of international investor interest, however, when it comes to the crunch, the demand seems like it isn't there when they were asked to put up the capital that's required." ^[16]

Interest costs an investor nothing. Capital committed at a price is what an offer needs, and the investors who declined said why. "We think that Firmus indeed has a compelling story. It just doesn't have a compelling valuation," UniSuper chief investment officer John Pearce said in an update to investors ^[10]. He also said UniSuper was concerned Firmus would have to go further into debt to fund its growth plans ^[11].

Pearce and the company agree on the business. Firmus builds liquid-cooled data centres, which it calls "AI factories", for clients including OpenAI and Meta ^[8]. Its board said the terms available "would not appropriately reflect the strength of the company's business and long-term growth outlook" ^[2]. The dispute is over what a share is worth. Pearce told the BBC the outcome was disappointing, saying the Australian Securities Exchange needs new stories and this could have been one if it had been correctly priced ^[12].

The BBC set the decision against investor and analyst concern about the hundreds of billions going into AI while long-term returns remain unclear ^[19]. Nvidia and Oracle shares fell in US trading on Thursday after reports that OpenAI's revenue was lower than previously thought ^[20]. That backdrop fits the idea that public investors are pricing AI infrastructure more strictly. The evidence for a wider pullback is one float, which would have been among Australia's biggest-ever listings, failing on its terms ^[15], plus a single day's share moves ^[20].

Replacing the float privately is a large ask. The listing's target, including a greenshoe option, was nearly 11 times the US$505 million round led by Coatue Management that Firmus raised in April ^[5][18][23]. Firmus also has US$2 billion in commitments from investors including Nvidia and Blackstone ^[17]. On timing, the company said only: "We will provide additional information to shareholders as those options progress." ^[7]

For a capacity buyer, two questions sort the exposure. One is whether the GPUs behind a contract are already bought or still waiting on a raise. The other is whether the operator's funding is committed or still in talks. Bought hardware with committed money gives a date to plan around. If the hardware is bought but the money is still in talks, the risk moves to the operator's debt, the concern Pearce raised ^[11]. Committed money for unbought hardware leaves a procurement queue to track. The fourth box, unbought hardware and money in talks, is where the reporting puts Batam today ^[21][13].

In that box I would write delivery milestones into the contract that track the financing close. The tradeoff is leverage. An operator still negotiating with its own investors has little room to give customers, and a buyer who insists on that clause may pay for it in price or queue position.