Firmus investor stock falls after reports AI data centre operator may cut $5 billion IPO

Oct 8 : Investor concerns that Nvidia-backed Firmus may cut the size of its $5 billion Australian initial public offering (IPO) drove a 30 per cent plunge in shares of construction services provider Maas Group, which owns 3.2 per cent in the AI data centre operator.

The final details of Firmus' share sale, the second-largest ever in Australia, were still being finalised on Thursday, according to a person familiar with the matter.

Firmus did not respond to a request for comment from Reuters.

Sentiment towards AI has shifted sharply in recent weeks as concerns over high valuations have broadened to worries the technology is slipping out of human control and the prospect that massive technology spending may never pay off.

Firmus and its advisors on Thursday were contemplating cutting the size of the IPO and reducing the price per share from A$11 each to A$8.25, according to local media reports.

Bookbuilding closed earlier Thursday and potential investors were told in a term sheet reviewed by Reuters "the joint active bookrunners will provide further information in relation to the offer."

SOME INVESTORS SAY THEY ARE WARY OF VALUATION

The deal's initial term sheet had said indicative offers for the IPO were already above the deal's size. But some potential investors told Reuters they were cautious about the company's burgeoning valuation, ability to execute on its ambitious growth plans and hefty debt pile.

Demand for Firmus stock from overseas investors was weaker than expected for the IPO, the reports said, which was to be a landmark transaction for Australia's subdued capital markets.

Shares of Maas closed down 22.4 per cent on Thurday, after falling much as 30 per cent in intraday trading, its weakest level since May 6. The company lost about A$517 million ($359.52 million) in market. It is valued at A$1.79 billion.

Maas was questioned by the Australian Securities Exchange (ASX) over the share price plunge.

The company said in an exchange filing that speculation over whether the IPO would proceed had weighed on sentiment, adding it was not aware of any undisclosed information that would explain the trading

"The selloff reflects a legitimate derating of the embedded value of its Firmus stake, but the magnitude is overdone," said Emanuel Ajay Datt, managing director of fund manager Datt Group.

A cut in Firmus' offer price to A$9 from A$11 would reduce the value of Maas' holding by about A$75 million, Datt said, adding that the loss was modest relative to the company's market value decline on the day.

Firmus' $5 billion IPO was to be Australia's largest new share sale in nearly three decades, behind only top telco Telstra's roughly $10 billion float in 1997.