Firmus investor stock falls after reports AI data centre operator may cut $5 bln IPO

• Firmus and advisors are reportedly considering cutting the IPO price from A$11 to A$9 per share and reducing the overall offering size, with bookbuilding closing Thursday amid uncertainty
• A price cut to A$9 would reduce Maas' Firmus holding value by approximately A$75 million, though analysts note this is modest compared to the A$517 million market cap decline
• The IPO was set to be Australia's largest since Telstra's roughly $10 billion float in 1997, but sentiment has shifted on concerns over AI valuations, technology spending returns, and Firmus' ability to execute growth plans

Summary

Key Development: Maas Group Holdings (MGH.AX) shares plunged 30% on October 8, wiping out A$517 million in market value, following reports that Nvidia-backed AI data center operator Firmus may significantly scale back its planned $5 billion Australian IPO.

Critical Details: Maas owns a 3.2% stake in Firmus. Reports indicate Firmus and its advisors are considering reducing both the IPO size and cutting the offer price from A$11 to A$9 per share. Such a price reduction would diminish Maas' holding value by approximately A$75 million. Bookbuilding closed Thursday with advisors promising investors "further information" on the revised offer terms.

Market Context: The potential IPO downsizing reflects broader sentiment shifts in AI investment. Investors have grown increasingly cautious about high valuations in the sector, concerns about technology delivering adequate returns, and questions around massive technology spending levels. Specifically for Firmus, investors cited wariness about the company's valuation, ability to execute ambitious growth plans, and substantial debt burden.

Demand Issues: Overseas investor demand proved weaker than anticipated for what was intended to be Australia's largest IPO since Telstra's A$10 billion float in 1997, representing a significant setback for Australia's subdued capital markets.

Expert View: Emanuel Ajay Datt of Datt Group acknowledged the selloff reflects legitimate concerns over Firmus' stake value but described the 30% decline as excessive relative to the actual A$75 million potential loss.

The Australian Securities Exchange formally questioned Maas about the unusual trading activity. Firmus did not respond to Reuters' request for comment.