Neocloud Firmus cancels IPO, blames market volatility

Firm had reduced initial share price due to weak demand

Australian AI cloud firm Firmus has backed out of a planned IPO, blaming volatile market conditions.

The company, which has signed deals to provide data center space for Meta and OpenAI, was due to IPO on October 23, but has now changed its plans.

It had been hoped the listing would raise $5 billion, making it one of the largest in Australian Stock Exchange history. However, as reported by DCD on Wednesday, the company had reduced its initial share price from AU$11 ($7.65) to AU$9 ($6.26) due to lack of interest from investors at home and abroad.

In a statement shared with CNBC, Firmus said the terms of the IPO did not match the strength of the company’s proposition and its outlook for growth.

“The board therefore concluded that proceeding with the offer was not in the best interests of the company and its shareholders," the Firmus statement said. "Firmus will now pursue capital from the private markets and consider alternative public and private market options.”

It caps a bad week for Firmus, after it was reported it had pulled the plug on its collaboration with CDC Data Centres, dubbed Project Southgate, that could have seen 1.6GW of capacity built in Australia. Only 43MW was delivered under the agreement, though Firmus is seemingly still going ahead with the build-out, but without CDC.

In August, the company raised $2bn from backers including Nvidia and Blackstone, following a previous $505m equity investment round in April. The August round gave Firmus a post-money valuation of more than $10.5 billion.

It has signed agreements with Meta and OpenAI to provide data center capacity in Indonesia and Malaysia

News of the IPO being cancelled will call into question the appetite of the public markets to bet on the future growth of neocloud companies like Firmus, which are planning massive AI data center build-outs but have little track record of being able to deliver infrastructure at scale.

It may also set nerves jangling at other AI cloud firms, such UK-based Nscale and US firm Lambda, which are planning listings of their own in the coming months.