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Firmus is preparing a $7bn ASX IPO targeting a valuation above $40bn, but Tasmanian residents and investment analysts question its community consultation and earnings forecasts.
Firmus is preparing to list on the ASX later this month after an anticipated initial public offering designed to raise $7bn from investors. It is on track to be the second-largest IPO on record behind Telstra's $14bn share sale in 1997.
Firmus Datacentre Draws Launceston Opposition
The float is also one of the top five IPOs in the world this year. The company is racing to get the multibillion-dollar float away amid opposition to fast-track datacentre approvals. From her balcony in Launceston, Kayla Thompson can see the buzz of construction at what will soon be one of Australia's first AI factories. Her teenage stepchildren get an even clearer view from their classroom window.
The company's massive 104-megawatt datacentre at St Leonards, worth an estimated $2.1bn, was given fast-tracked approval by the city of Launceston in September last year without a public hearing. Thompson was furious. She joined a protest group that believes Tasmanians were kept in the dark by the company until after construction began.
"Their consultation was nonexistent until they had it shoved in their face that they made a mistake," says Thompson. "By then, it was too late. " "The more we researched this company, the less appropriate it seemed that size of facility should be voted on by a local council with limited community awareness," she says. Joe Zadravec, who lives close to another proposed Firmus datacentre, says the company did a bit of a mea culpa.
"They said we handled that badly and we should have done something more. But they only did that after they were caught.
Valuation Surges Amid AI Expansion
" A Firmus spokesperson confirms the company overhauled its community engagement program after receiving strong feedback from Launceston locals. As Firmus prepares to ask prospective shareholders for billions of dollars in the heat of a global AI boom, its Tasmanian missteps offer an unfiltered look at the operational risks behind the pitch. A year ago, as local councillors approved the five-hectare AI factory in Launceston, Firmus was worth just under $2bn in a private funding round.
As plans emerged to build liquid-cooled datacentres across the Asia-Pacific alongside AI chip maker Nvidia, which acts as both an investor and hardware supplier, that valuation surged. In less than 12 months, the implied valuation leaped from $2bn toward a targeted $40bn-plus ASX debut. Now, investment analysts are dangling figures as high as $100bn. One investment manager who viewed the company's draft prospectus tells Guardian Australia the valuation keeps randomly compounding when nothing has really changed.
"I'm not saying it's not worth anything, it's just not worth the valuation they're trying to get it away at," the investment manager says. The majority of its ambitious pipeline is unbuilt, with the company now operating just two facilities, one in Melbourne and the other in Singapore. The draft prospectus shows Firmus is forecasting $5bn in annual earnings once its development pipeline progresses, which would put it in the top tier of ASX earners.
"This is a capital-hungry business that needs to keep raising debt and/or equity to fund the losses, and meanwhile we're being told this will have $5bn of earnings within a few years - it's a little bit of a fairytale," the investment manager says. A Firmus spokesperson declined to comment when asked a series of questions by Guardian Australia regarding the feasibility of its earnings forecast and valuation.
US Datacentre Boom Shows Obstacles
The Firmus IPO is a pitch to investors that they can own a stake in the future, with echoes of the speculative allure of Elon Musk's SpaceX. But while Firmus relies on the prompt construction of datacentres to justify its valuation, the US, which is further along in the AI datacentre boom, offers a sobering look at the obstacles ahead.
A comparable datacentre offering was recently delayed in the US after bankers struggled to find buyers willing to support a sought-after valuation of US$50bn or more. Another datacentre developer withdrew its plans for a datacentre near a public school. Part of the problem is that datacentres are hitting community resistance, with US cities Tulsa, New Orleans and Birmingham among those implementing temporary bans on permits and construction.
Community anger typically stems from the scale of the datacentres, their strain on power grids and water supplies, heavy use of diesel backup generators, and the speed of approvals that have left residents feeling shut out. Firmus is leaving new investors at risk of holding the bag if the excitement proves to be mostly hype. Rob Talevski, the chief executive of Webull Securities Australia, says there's a danger retail investors become the exit strategy for Firmus's institutional investors.
Small Float Could Benefit Early Backers
New York trading houses Blackstone and Jane Street are among the early backers who may look to the public float to offload their stakes at high prices. Firmus is offering what is known as a small free float, whereby the company's founders and early investors initially retain most of the company's shares. This can create a temporary scarcity of stock that initially drives the share price higher.
That gives those backers the ability to offload their holdings at inflated prices before their stock floods the market. There are no escrow arrangements in place for major backers like Blackstone, leaving institutional investors free to sell down their stakes immediately after it lists. The company's founders, including Tim Rosenfield and Jonathan Levee, can begin selling some of their holdings as early as six months after listing if the stock price rallies.
"The question retail might have to ask is, are they basically the liquidity exit strategy for some of the early investors? " says Talevski. "That's the bit that probably is not spoken about enough, and that's where the question marks are for a retail investor. " Richard Hemming, the editor at Under The Radar Report, says there are so many intangibles around the float that investors should be cautious.
Firmus IPO Launceston Datacentre AI Factory Backlash Australian Stock Market Community Opposition AI Datacentres Launceston ASX Listing Community Backlash
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