Australian probes into Firmus’ $5 billion offering and $30.6 billion valuation
Key Facts
The Australian Securities and Investments Commission is conducting targeted inquiries with the joint managers of Firmus’ offering after its IPO faltered earlier this month, Capital Brief reported, citing ASIC Chair Sarah Court. The planned offering aimed to raise $5 billion, with a target equity valuation of $30.6 billion. Court said the inquiries include JPMorgan, Morgan Stanley, Bank of America and Morgans Financial, and remain ongoing. The regulator said the continuation of inquiries “should not be taken as an adverse conclusion” about the offering managers. ASIC said it is reviewing whether the managers’ statements about investor demand had a reasonable basis, and will consider the information it gathers to determine any further action.
The target share price was A$11, which would have valued Firmus’ equity at $30.6 billion, Reuters reported via Investing.com. That valuation is nearly three times the company’s $10.5 billion value after a private funding round in early August. The target amount to be raised through the IPO was $5 billion, a figure separate from the company’s valuation. Reuters said analysts working for the offering managers estimated Firmus’ debt at about $30 billion. That would have put enterprise value at $60 billion, according to those analysts. The company was founded in 2019.
Investor demand fell before Firmus withdrew from the offering, after CDC Data Centres Chief Executive Greg Boorer said in a podcast that a plan to develop 1.6 gigawatts of AI facilities with Firmus “was no longer proceeding,” Reuters reported. The company operated two leased data centers in Melbourne and Singapore and planned to build five more in the Asia-Pacific region. A portfolio manager told Reuters the asking price was high relative to expected future results and required near-perfect execution to justify. He added that the market was not ready to take on the risk at that stage. These factors put the valuation, expansion plan and reliance on executing future projects at the center of the debate surrounding the failed IPO.
The cancellation of the offering affected Maas Group shares, which were linked to the deal. They closed down 6.7% at A$4.63 on October 9, after falling 22.4% the previous day, according to data cited by Investing.com. The decline came over two consecutive sessions after Firmus withdrew its planned IPO, while the available information provided no further details about the shares’ performance afterward. Sarah Court said tough negotiations between issuers and informed institutional investors “are a normal and important feature of the price discovery process.” She added that Firmus’ withdrawal did not prove that Australian capital markets or their regulatory frameworks had failed. The regulator’s inquiries are based on questions raised about the accuracy of information provided to institutional and wholesale investors during marketing and bookbuilding.
Firmus’ founders said the company would now seek to raise capital in private markets and would consider alternative options in international public markets to support its next growth phase, Reuters reported. ASIC, meanwhile, said it would assess the information gathered in its inquiries before deciding on any next steps. The inquiries focus on whether the offering managers’ statements about investor interest and demand had a reasonable basis. The available information did not say that the regulator had opened a formal investigation or taken action against the banks. It also stressed that the ongoing inquiries do not warrant an adverse conclusion about the offering managers before its review is complete.