Nvidia-backed AI data center firm Firmus has seen its IPO fall through, with its $30 billion valuation questioned after weak subscription demand from US investors.

Firmus Grid, an Australian artificial intelligence data center operator backed by NVIDIA, canceled its initial public offering on Friday. The company had planned to list at a valuation of about $30 billion, which would have been one of Australia's largest IPOs. Overvaluation, weak investor subscription demand, and market concerns about the large financing needs of AI infrastructure led to the cancellation.

Zhitong Finance learned that Firmus, which NVIDIA (NVDA.US) backs, had hoped to attract substantial participation from U.S. institutional investors. However, during roadshow presentations on Tuesday and Wednesday of this week, several U.S. fund managers judged the target valuation of $30 billion to be excessively high.

As subscription demand fell short of expectations, the underwriting team considered scaling back the offering and lowering the valuation to salvage the deal. According to reports, the proposed adjustments included reducing the fundraising size to about $3 billion and trimming the valuation to between $20 billion and $25 billion. Even after revising the terms, the underwriters could not secure sufficient support from U.S. investors and ultimately canceled the IPO.

Bank of America (BAC.US), JPMorgan (JPM.US), Morgan Stanley (MS.US), and the Australian financial services firm Morgans Financial served as joint lead underwriters.

Earlier, the IPO had appeared to be gaining momentum. When finalizing the offering terms, the company said it had secured strong demand from strategic and global institutional investors, and underwriters reported that preliminary subscription intentions exceeded the size of the offering.

As the process advanced, however, market skepticism about the company's valuation and transaction structure steadily grew. A key concern was that existing shareholders might not be subject to lockup agreements, meaning they could sell their holdings shortly after the listing and put downward pressure on the share price.

On Wednesday, reports of weak subscription demand and a possible downward revision to the offering price continued to surface, adding to investor anxiety. Some fund managers scaled back their subscription orders, while others withdrew their intentions to subscribe altogether.

On Thursday morning, Firmus's bookbuilding process concluded as scheduled, but it remained unclear whether the company could complete the offering at the originally planned price of A$11 per share. Amid these concerns, shares of Maas Group Holdings, one of Firmus's backers, plunged as much as 30% on the Sydney exchange, the largest intraday decline on record for the stock.

Jun Bei Liu, co-founder and chief portfolio manager at Australian investment firm Ten Cap Investment, said she had never seen an IPO that sparked such deep market divisions. She also noted that if the listing failed, Firmus might turn to its existing investors for additional funding.

The company's valuation rose sharply in a short period, which became one of the main obstacles to the IPO. In April this year, in a funding round backed by Coatue Management and NVIDIA, Firmus was valued at about $5.5 billion. By August, it closed another $2 billion financing round with participation from prominent investors such as Jane Street and Blackstone (BX.US), pushing its valuation above $10.5 billion.

Just two months later, Firmus sought to go public at a valuation of roughly $30 billion, nearly double its valuation from the August round. This rapid increase led some investors to question whether the company's actual operating scale could support its market value.

According to disclosed data, Firmus is projected to generate only $51 million in revenue for fiscal year 2026, yet its IPO sought a valuation above $30 billion. The company plans 912 megawatts of data center capacity but has commissioned just 46 megawatts so far.

As a result, investors must value the company largely on a substantial pipeline of data center projects that have yet to be built, along with the profits those projects are expected to generate in coming years. Whether these growth targets can be achieved depends on successful project development, meeting customer demand, and securing large-scale financing.

During its roadshow, Firmus used enterprise value-to-EBIT (EV/EBIT) as its valuation metric and compared itself with companies such as the U.S. AI cloud computing firm CoreWeave (CRWV.US). Although Firmus's proposed multiple of about 13 times is significantly lower than CoreWeave's, the calculation is based on projected profits two years out rather than current earnings. CoreWeave, by contrast, has a longer operating history and a revenue base far larger than Firmus's.

Leonid Mironov, a portfolio manager at Gavekal Capital, bluntly stated that the IPO suffered from several problems, including an unfavorable transaction structure, an excessively large offering size, an overly high price, and unreasonable valuation metrics. He noted that Firmus's valuation was below $2 billion less than a year ago, had climbed to roughly $10 billion by August, and by October was seeking a valuation three times that level.

According to reports, some investors had initially been willing to accept a valuation of around $25 billion. Just days before pricing, however, Firmus announced a compute capacity supply agreement with its existing customer, Meta Platforms (META.US), covering its data center facilities in Southeast Asia. The company subsequently raised its financial forecasts based on this agreement and set a higher IPO valuation accordingly.

This adjustment further heightened concerns among some investors. They argued that Firmus is still early in its business development yet is asking investors to pay a steep premium for high growth over the next several years, growth that will require billions of dollars in additional capital.

The personal background of co-founder Oliver Curtis also drew attention. Curtis served a prison sentence for insider trading about a decade ago. Although insiders say this was not the decisive factor behind the IPO's failure, it nonetheless increased caution among some investors.

The collapse of Firmus's IPO also highlights growing investor concern about the risks of financing AI infrastructure. As global technology companies accelerate data center development, these projects require substantial capital, and it often takes considerable time after completion before they generate stable revenue. For firms without a proven track record that rely on future projects to meet growth targets, investors are increasingly scrutinizing valuations, funding needs, and execution capabilities.

Ultimately, demand from U.S. institutional investors fell short of expectations, and Australian domestic investors were unable to fill the gap. Firmus formally withdrew its IPO plan on Friday.

According to sources familiar with the matter, the company is considering a smaller private financing round, potentially raising about $3 billion from existing investors. These same investors had previously planned to subscribe to roughly half of the shares offered in the IPO.