Tectonic Investment Management, a significant institutional backer of Firmus Technologies, believes a potential Nasdaq listing could generate higher returns after Firmus withdrew its plans for an initial public offering on the ASX. Firmus Technologies is an artificial intelligence infrastructure provider that builds and operates neocloud data centres. These facilities allow companies to rent high-tech Nvidia chips for AI model training and processing. The proposed $US5.5 billion ($7.9 billion) deal, which would have valued the AI play at $44 billion, was pulled last week, making it the largest IPO withdrawal since Telstra’s offering in 1997.
Tectonic chief investment officer Ben Haan described the setback as “disappointing” given months of preparation. However, Tectonic, which first invested in Firmus in 2021 and now controls over 5 per cent, anticipates Firmus will use the remainder of the year to expand data centre capacity and solidify its operating track record. Mr Haan suggested a Nasdaq listing is the most likely future path, citing US investors’ stronger understanding of AI and data centre stocks, with several neocloud peers already trading there. Other options include a trade sale, merger, or remaining private for longer, with any outcome realistically six to 12 months away.
Mr Haan indicated that a Nasdaq listing with “more operating AI factories and revenue-generating contracts” could ultimately create “considerably more value”. The failure of the ASX float, he noted, stemmed from investor scepticism regarding the proposed valuation, rather than issues with the underlying business. Firmus, expecting roughly $20 billion in annual revenue, has secured contracts with Meta Platforms and OpenAI. Tectonic clarified that nothing about Firmus’s operations, contracts, or customers changed during the bookbuild, but investors were hesitant to fully value projects not yet delivered, requiring Firmus to bring more capacity online to “prove it”.
Tectonic continues to value its Firmus stake in line with the neocloud’s private funding round in August, which saw it raise $US2 billion at a $US10.5 billion valuation. Despite the optimism, Tectonic acknowledged risks, including potential delays in building data centres and the possibility of contracts lapsing if capacity is not brought online as planned.
