Firmus data center operator IPO faces investor skepticism over track record and valuation amid community opposition to data center development.

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.

Like many of her neighbours, Thompson didn't realise Firmus Technologies had an ambitious plan to build datacentres in Tasmania until after construction began. The Australian company was preparing to list on the ASX later this month following 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, and one of the top five in the world this year.

Its 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 joined a protest group believing Tasmanians were kept in the dark.

"Their consultation was nonexistent until they had it shoved in their face that they made a mistake," she says. "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."

In June, facing community backlash threatening two other proposed datacentres in the state's north-east, Firmus organised dozens of public consultation sessions with a pre-prepared message. Joe Zadravec, who lives close to another proposed Firmus datacentre, recalls: "They did a bit of a mea culpa and said we handled that badly and we should have done something more. But they only did that after they were caught."

A Firmus spokesperson confirms the company overhauled its community engagement programme after receiving strong feedback from Launceston locals.

A year ago, as local councillors approved the five-hectare AI factory, 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. Investment analysts are now dangling figures as high as $100bn, a price tag that would make Firmus twice the size of Telstra.

One investment manager who viewed the company's draft prospectus tells the situation bluntly: the valuation "keeps randomly compounding when nothing has really changed". The majority of Firmus's ambitious pipeline remains unbuilt, with the company currently operating just two facilities, one in Melbourne and the other in Singapore. The draft prospectus forecasts $5bn in annual earnings once its development pipeline progresses—a figure that would place 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 on the feasibility of its earnings forecast and valuation.

While Firmus relies on the prompt construction of datacentres to justify its valuation, the US offers a sobering look at the obstacles ahead. A comparable datacentre offering was recently delayed after bankers struggled to find buyers willing to support a sought-after valuation of US$50bn or more. Part of the problem is that datacentres are hitting community resistance, with US cities Tulsa, New Orleans and Birmingham implementing temporary bans on permits and construction. In Sydney, infrastructure company Goodman Group has just withdrawn its plans for a datacentre near a public school amid fierce local opposition.

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 racing to get its multibillion-dollar float away amid opposition to fast-track datacentre approvals, leaving new investors at risk if the excitement proves mostly hype. Rob Talevski, chief executive of Webull Securities Australia, warns there's a danger retail investors become the "exit strategy" for Firmus's institutional investors. New York trading houses Blackstone and Jane Street are among early backers who may use the public float to offload their stakes at high prices.

Firmus is offering what is known as a small free float, whereby founders and early investors initially retain most company shares. This creates a temporary scarcity of stock that initially drives the share price higher, giving those backers the ability to offload 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 immediately after listing. The founders—Oliver Curtis, who has spent time in prison for insider trading, his cousin Tim Rosenfield, and Curtis's former brother-in-law Jonathan Levee—can begin selling some of their holdings as early as six months after listing if the stock price rallies.

Richard Hemming, editor at Under The Radar Report, says there are so many interested parties pushing for a successful IPO—brokers, investment banks and early institutional investors—that the risks to retail investors have been understated. "Telstra is one of the biggest companies in Australia and these guys are just coming from nothing and saying that they're going to be bigger than Telstra—it's gobsmacking," he says.

Back in Tasmania, Firmus has turned to a tested method of countering bad press: sponsoring major sporting teams. The company's name will now be carried by the Tasmanian Devils AFL team, Cricket Tasmania, and the JackJumpers and Jewels basketball teams. Emma Sherry, dean of RMIT's school of management, describes this as a classic case of "sportswashing". "This works until it doesn't. The goodwill relies on a bet that the community loves the sport enough to forgive the potentially problematic relationship," she says.

Firmus disputes this characterisation, saying the company was founded in Tasmania and is home to staff passionate about sport. "Our sporting partnerships are not a substitute for genuine and thoughtful community engagement," the spokesperson says.

So far, the deals have done little to ease concerns of vocal critics. "We are already distrusting of AI in a general sense," Thompson says. "Why would we trust this company?"