(Bloomberg) — The sudden drop in demand for an Nvidia-backed data center company’s IPO reveals new cracks in the AI funding boom.
Most read on Bloomberg
The planned $5.5 billion listing by Australian firm Firmus Grid Ltd. became shrouded in uncertainty after the deal failed to attract adequate support for the share price trading at A$11, according to people familiar with the matter.
Some investors grew cautious just days after the company said it had received signs of interest well beyond the size of the offering, putting it on track for a $30 billion valuation, the sources said. Although Firmus closed its order books on Thursday, it has so far given no clear guidance on the price or structure of the deal, an unusual lack of communication that is fueling speculation that the price could be reduced or the IPO canceled altogether.
The deal underscores growing concern about the amount of capital AI infrastructure companies are demanding from public markets at a time when borrowing costs are rising. Much of Firmus’ valuation rests on the fact that the company has successfully built a pipeline of data centers across Asia serving clients such as Meta Platforms Inc. and OpenAI. It currently operates two data centers. Proceeds from the IPO were needed to help finance the construction of the wider network.
“Investors still believe in AI,” said Maxence Visseau, Dubai-based investment director at Arkevium Capital, a multi-strategy investment firm. “What they won’t do is pay any price for companies that spend huge sums on data centers, depend on a few big customers and promise profits years from now.”
Listen and follow the Bloomberg Australia podcast on Apple, Spotify, YouTube or wherever you get your podcasts.
Concerns about Firmus ranged from a lack of proven track record to high valuations and the risk that existing shareholders could flood the market soon after listing – with around 58% of shares free to trade on day one – according to discussions with at least 10 investors and advisers. Increasing regulatory oversight and stricter financing requirements for data centers have also been cited as a deterrent.
A representative for Firmus did not respond to requests for comment.
UniSuper, one of Australia’s largest superannuation funds, was among the institutional investors who did not participate in the IPO.
“We think Firmus does indeed have a compelling story. Its valuation is just not compelling,” Chief Investment Officer John Pearce said in an investor update released Thursday. “So many things have to go right to justify the valuation.” The fund was also concerned that Firmus would need to continue raising debt and equity to finance its expansion plans, it said.
Prison sentence
“Investors are increasingly nervous,” said Phil Wool, head of portfolio management at Rayliant Global Advisors. “Firmus was going to be one of the biggest Australian IPOs ever, so from that point of view it constitutes a historic failure.”
Firmus was founded in 2019 as a Bitcoin miner by Oliver Curtis – who served time in prison for insider trading – as well as Tim Rosenfield and Jonathan Levee. The company became the subject of the tabloids earlier this year when the prospect of an IPO materialized, in part because of the criminal history of Curtis and his partner, public relations executive Roxy Jacenko, a prominent socialite.
Investors around the world are starting to question the ambitious goals and high prices attached to AI projects. Last month, data center company Accelevation Holdings Corp. priced its U.S. debut below its marketed range. South Korea’s Kospi is down 27% from its June peak as a boom at memory chip makers Samsung Electronics Co. and SK Hynix Inc. has subsided.
Warnings about inflated valuations are growing louder. Billionaire Ray Dalio said this week that AI is a “classic bubble” that is about to burst due to the huge debt taken on to finance the technology and rising rates. Michael Burry, famous for betting against the U.S. housing market before the financial crisis, said in an article on Tuesday that the stock market was “obviously in its first stage of mourning, of denial. By 2000 and 2008, that stage lasts 6 to 9 months.”
Bain & Co. projects that the AI industry will need to generate $6 trillion in annual revenue by 2031 to justify deploying capital to build data centers.
Investor skepticism
Firmus was valued at $10.5 billion in early August after a fundraising round that included Jane Street and Blackstone Inc., meaning it was looking to nearly triple its valuation in two months. The Australian company, which had revenue of $51 million in fiscal 2026, plans to build data centers it calls AI factories using hardware from backer Nvidia. It has a 912 megawatt pipeline, of which only 46 MW has been built, according to investor documents seen by Bloomberg.
“There is a lot of investor skepticism about this IPO,” said Jun Bei Liu, co-founder and senior portfolio manager at Ten Cap Investment. “The challenge is they still have to build a lot of these data centers,” she told Bloomberg Television.
Companies are increasingly encountering resistance when building data centers. Oracle Corp. invoked force majeure in late September in connection with its data center project in New Mexico. Apollo Global Management Inc. is working to ensure that the AI infrastructure deals it funds are not derailed by local opposition, its head of infrastructure, Olivia Wassenaar, said Wednesday.
Some AI cloud computing companies are turning to risky debt to raise capital. At the same time that JPMorgan Chase & Co. was co-lead underwriter of the Firmus listing – along with Bank of America Corp., Morgan Stanley and Morgans Financial Ltd. – it also announced a return of around 11% on a $5 billion leveraged loan sale on behalf of Volta Infrastructure Holdings Ltd. to finance a data center complex in Norway.
Reflecting concerns over the fate of Firmus’ IPO, shares in Maas Group – which owns a stake in the company and has at least A$855 million in power infrastructure contracts linked to its construction – fell a record 30% in Sydney on Thursday, before paring their losses to 22%. The Maas Group said there had been “significant market speculation and commentary” about whether the proposed IPO would go ahead.
What was supposed to be a blockbuster stock sale turns into a lesson in hubris. But with KKR & Co. estimating that $8 trillion will be needed to complete the global development of AI, pressure will only intensify for companies to raise capital. This includes Anthropic PBC, which is aiming for a mega IPO as early as next month.
“I don’t think this will be the last AI-related IPO to disappoint, as enthusiasm for the theme reaches fever pitch and investors wonder what level of future growth the issuance tsunami of the past two years will require to make financial sense,” Rayliant’s Wool said.
–With help from Amy Bainbridge, Haidi Lun and Edwin Chan.
Most read from Bloomberg Businessweek
©2026 Bloomberg LP
