Phil King, co-founder of Regal Partners, recently addressed a Morgans conference across Sydney, Melbourne, and Brisbane, advocating for the upcoming Firmus initial public offering. Firmus is described as a “neocloud” company strategically positioned to benefit from the current technology revolution and a significant capital expenditure boom. The company, which has pivoted from its origins as a bitcoin miner, is reportedly seeking a market capitalisation between $40 billion and $50 billion. This ambitious valuation is comparable to established Australian entities such as Woolworths or Fortescue, despite Firmus being only seven years old and currently reporting no substantial earnings.
King articulated his perspective on Firmus’s market timing, stating the company is “incredibly lucky” and ideally positioned for “the biggest technology revolution we have seen and the biggest cap ex boom in history.” He highlighted the company’s successful pivot from a bitcoin miner to its current “neocloud” focus. While acknowledging the high valuation, which could imply a multiple of 1000 times revenue, King presented a three-pronged rationale underpinning Firmus’s potential and growth trajectory to the brokers.
He detailed concepts of “financial leverage,” suggesting the company could finance 100 per cent of any GPUs with debt once built, and “operating leverage,” implying the ability to extend the operational life of GPUs beyond their initial sticker-life. King also spoke of “valuation leverage,” where actual leverage could amplify equity returns. He further asserted that “every time Firmus invests a billion dollars, it creates an additional $1 billion or $2 billion of value.” King attributed negative sentiment to “sceptics in the newspaper.”
Despite having previously sold some Firmus shares from Regal’s pre-IPO fund earlier this year, King informed the conference that he is acquiring more in the IPO for various funds. He also noted that the company’s management team, led by “Ollie,” is driven by a desire to prove themselves beyond just financial rewards. The company’s own communications strategy, as outlined in a job advertisement, reportedly states that Firmus “runs on narrative as much as it runs on engineering.”
