Nvidia-Backed IPO’s Cratering Demand Sends Warning on AI Funding Bloomberg · Source: Firmus Julia Fioretti, Sangmi Cha and Manuel Baigorri Thu, October 8, 2026 at 6:20 AM EDT 6 min read NVDA -0.74% Trade NVIDIA on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
(Bloomberg) -- The sudden plunge in demand for an Nvidia-backed data center company's initial public offering is revealing fresh cracks in the AI funding boom.
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The planned $5.5 billion listing by Australia's Firmus Grid Ltd. has become shrouded in uncertainty after the deal failed to attract adequate support for the A$11 marketed share price, according to people familiar with the matter.
Some investors turned cautious just days after the company said it received indications of interest well above the offer size, putting it on track for a $30 billion valuation, the people said. While Firmus closed order books on Thursday, it has so far given no clear indication of the price or the deal structure, an unusual communication gap that's fueling speculation the price may be cut or the IPO scrapped altogether.
The deal underscores growing concern over how much capital AI infrastructure companies are demanding from public markets at a time when borrowing costs are rising. Much of Firmus' valuation is based on the company successfully building a pipeline of data centers across Asia serving customers such as Meta Platforms Inc. and OpenAI. Currently it operates two data centers. The IPO proceeds were needed to help fund construction of the broader network.
"Investors still believe in AI," said Maxence Visseau, Dubai-based chief investment officer at Arkevium Capital, a multi-strategy investment firm. "What they won't do is pay any price for companies that spend huge amounts on data centers, depend on a few big customers, and promise profits years from now."
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Concerns about Firmus ranged from its lack of a proven track record to high valuations and the risk that existing shareholders could flood the market soon after listing — with about 58% of shares free to trade from day one — according to discussions with at least 10 investors and advisers. Increasing regulatory scrutiny and tighter financing conditions of data centers were also cited as a deterrent.
A representative for Firmus didn't respond to requests for comment.
UniSuper, one of Australia's biggest pension funds, was among institutional investors not taking part in the IPO.
"We think that Firmus indeed has a compelling story. It just doesn't have a compelling valuation," Chief Investment Officer John Pearce said in an investor update published Thursday. "So much has to go right to justify the valuation." The fund was also concerned that Firmus would have to continue to raise debt and equity to fund its expansion plans, he said.
"Investors are increasingly on edge," 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 perspective, it registers as a historical fail."
Firmus was founded in 2019 as a bitcoin miner by Oliver Curtis — who served a prison sentence for insider trading — as well as Tim Rosenfield and Jonathan Levee. The company became the subject of tabloid fodder earlier this year as the prospect of an IPO materialized, partly due to Curtis' criminal background and his partner being PR executive Roxy Jacenko, a prominent socialite.
Around the world, investors are beginning to question the ambitious targets and lofty price tags attached to AI endeavors. Last month, data-center company Accelevation Holdings Corp. priced its US debut below its marketed range. South Korea's Kospi is down 27% from its June peak as a boom around memory chipmakers Samsung Electronics Co. and SK Hynix Inc. subsided.
Warnings about inflated valuations are getting louder. Billionaire Ray Dalio said this week AI is a "classic bubble" that's near bursting due to the huge amount of debt taken on to fund the technology and rising rates. Michael Burry, famous for betting against the US housing market before the financial crisis, said in an X post on Tuesday that the stock market is "quite obviously in its first stage of grief, denial. Per 2000 and 2008, this stage lasts 6-9 months."
Bain & Co. projects the AI industry needs to earn $6 trillion in annual revenue by 2031 to justify the capital being deployed to build data centers.
Firmus was valued at $10.5 billion in early August after a fundraising round which 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 the 2026 financial year, plans to build data centers it calls AI factories using hardware from backer Nvidia. It has a pipeline of 912 megawatts, of which only 46MW has been built, according to investor documents seen by Bloomberg.
"There's a lot of investor skepticism in terms of this IPO," said Jun Bei Liu, co-founder and lead portfolio manager at Ten Cap Investment. "The challenge is they are yet to build a lot of those data centers," she told Bloomberg Television.
Companies are increasingly running into resistance when building data centers. Oracle Corp. cited force majeure in late September in relation to its New Mexico data center project. Apollo Global Management Inc. is working to ensure the AI infrastructure deals it finances don't get derailed by local opposition, its head of infrastructure Olivia Wassenaar said Wednesday.
Some AI cloud companies are turning to risky debt to raise capital. At the same time as JPMorgan Chase & Co. was joint lead manager on the Firmus listing — along with Bank of America Corp., Morgan Stanley and Morgans Financial Ltd. — it was also pitching a yield of about 11% on a $5 billion leveraged-loan sale on behalf of Volta Infrastructure Holdings Ltd. to finance a data center complex in Norway.
Reflecting concern over the fate of Firmus' IPO, shares of Maas Group — which holds a stake in the company and has at least A$855 million in electrical infrastructure contracts tied to its buildout — fell by a record 30% in Sydney on Thursday, before paring losses to 22%. Maas Group said there had been "significant market speculation and commentary" over whether the proposed IPO will proceed.
What was supposed to be a blockbuster share sale is turning into a lesson on hubris. But with KKR & Co. estimating $8 trillion is needed to complete the global AI buildout, pressure will only intensify for companies to raise capital. That includes Anthropic PBC, which is targeting a mega IPO as early as next month.
"I don't think it will be the last AI-related IPO to disappoint as enthusiasm for the theme crests and investors grapple with just how much future growth the last couple years' tsunami of issuance will require to make any financial sense," said Rayliant's Wool.
--With assistance from Amy Bainbridge, Haidi Lun and Edwin Chan.
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