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An Australian AI data centre developer has abandoned its planned initial public offering before a single share was sold, in a deal that had been positioned as the country’s biggest listing since Telstra in 1997.
Firmus, which is backed by Nvidia, had been seeking to raise about A$7 billion at A$11 a share. That price would have valued the company at A$44 billion. Potential investors considered the asking price too high, and the offer was withdrawn.
The company’s valuation rested largely on its ability to build a pipeline of data centres across Asia serving customers including Meta and OpenAI. The listing would also mark a comeback for co-founder Oliver Curtis, who has served a prison sentence for insider trading.
The withdrawal comes as concerns grow about how much capital AI infrastructure companies are seeking from public markets amid rising borrowing costs. Data centre construction is capital intensive, and the sums involved are large relative to the revenue the assets generate in their early years.
The abandoned float has been linked to share market tremors this week, as investors reassessed the valuations of AI-related companies and the scale of their spending. A wider backdrop of an oil shock, difficult inflation and rising interest rates has added to the pressure.
Whether the Firmus decision marks a turning point for AI stocks or is simply one deal priced too aggressively remains unclear. Market history offers no settled answer on which transaction or event marks the top of a cycle.
The closest parallel is the dotcom boom, which turned in the same week of March 2000 that Dutch internet service provider World Online listed in Amsterdam. Its shares closed the first day of trading just €0.20 above the offer price, and fell sharply after the weekend. The company was still valued at about €12 billion at that point.
Italian company Tiscali later completed a £3 billion takeover of World Online that year. About a decade on, investors recovered roughly €110 million from ABN Amro and Goldman Sachs after a court found the lead managers had misled investors during the float.
The internet itself survived the crash. Google, founded in 1998 and listed in 2004, and Amazon are now among the world’s largest companies. Firmus did not reach the starting line that World Online crossed.
For Firmus, the immediate question is where the capital to keep funding its data centre programme comes from. A public listing was to have supplied most of it. Private funding, joint ventures, or a smaller raise at a lower price are alternatives, each with different costs.
The episode also matters for the broader AI infrastructure market. Companies building data centres across Asia depend on raising large sums at valuations that assume the build-out proceeds on schedule. If public investors apply a lower price to that risk, the cost of capital rises for everyone in the sector, including listed operators already trading.
The scale of the spending is unusual. Kristalina Georgieva, chief executive of the International Monetary Fund, has written that investment flowing into AI will likely exceed the sums that went into building the railroads, the electricity grid and the internet.
New Zealand firms buying AI services or holding AI-related shares through KiwiSaver funds are exposed to how this repricing unfolds. A higher cost of capital for data centre developers feeds through to the price of computing capacity, and to the returns investors earn on the equities that supply it.
The labour market effects are also in scope. IMF research indicates roughly 40 per cent of jobs globally are exposed to AI, rising to about 60 per cent in advanced economies. Some roles will be augmented and others replaced, and the pace of change is expected to increase.
Morrison chief executive Paul Newfield, whose firm manages more than US$30 billion including investments in AI data centre businesses, told the Institute of Finance Professionals New Zealand conference in Auckland that regulation has historically followed years of accumulated harm. He cited US road deaths, which climbed until the 1960s before seatbelt and safety laws arrived, and said he wants data centre regulation.
The Firmus offer was withdrawn before any shares were allotted.
NZ Business News reports on the decisions, deals and numbers shaping New Zealand business — the companies making them, the policy and market conditions they work within, and what it means for the people running businesses here.