Firmus $43.1b ASX listing: Fund managers warn over AI data centre giant’s valuation ahead of October IPO

Fund managers are sceptical that shares in artificial intelligence and data centre hopeful Firmus are a good buy ahead of its planned $43.1 billion listing on the ASX later this month.

Firmus is seeking to raise $US5 billion ($7.2 billion) through an initial public offering (IPO) that would make it among Australia’s top 20 most valuable companies, despite having never made a profit and being unlikely to do so for several years.

Founded as a bitcoin miner in 2019, Firmus has since pivoted to operating data centres that sell the computing power internet giants like Meta and OpenAI require to provide online services linked to advances in AI.

“The valuation looks completely over the top for what Firmus is presenting,” said Dean Fergie, founder of Cyan Asset Management.

“I’m wary of companies that achieve very large valuations in short periods of time, particularly one that doesn’t appear to have any ground-breaking technology. They’ve been great at getting investments, but it’s only seven years old and doesn’t have a track record of building out complex data centres.”

According to Firmus’ pathfinder prospectus sent to brokers on October 5, the company currently has two operational data centres, with plans to build another five at a cost of $US37.7 billion.

If it delivers on its ambitious plans to have seven operational data centres by the end of 2028, it’s targeting total earnings before interest and tax (EBIT) of $US5.8 billion on forecast revenue of $US12.9 billion in 2029.

Around 85 per cent of the forecast EBIT and revenue is expected to come from data centres under construction in Malaysia and Indonesia.

Fund manager Michael Frazis, the founder of Frazis Capital, warned investors against placing too much reliance on the company’s targets out to 2029.

“The projects (data centres) that EBIT is being quoted on aren’t fully funded,” he said. “They (Firmus) also exclude central expenses which are non-trivial.”

Financials

Over the financial year to June 30, 2026, Firmus posted a loss of $US68.2 million on operating revenue of $US50.8 million.

The company states in a 56-page investment offer circulated to sophisticated and professional investors that it has $US72.8 billion in future revenue secured under contracts.

The contracts or service level agreements typically demand it provide the compute capacity to major customers such as $US1.9 trillion Instagram-owner Meta in return for usage fees.

Firmus’ limited prospectus also says its technology allows it to construct data centres at a cost of $US6 million per megawatt of computing power sold, compared with an industry average of $US11.3 million per megawatt.

“But there’s a hell of a lot downside to the valuation on a risk versus return basis,” said Fergie.

“Even if they execute fantastically, you could still argue maybe that only just about justifies its valuation, so my concern is (over the next year shareholders will either be looking at a small loss or a large loss.”

Firmus has not responded to questions, but has dismissed critics by touting major partnerships with US chip giant Nvidia and investment group Blackstone as powerful backers.

On Monday, Bloomberg reported Firmus plans to allocate half of the available shares from the $US5 billion IPO to Nvidia and Blackstone, allowing them to increase equity holdings that currently stand at 7.2 per cent and 6.7 per cent of the company.

Co-founder and convicted insider trader, Oliver Curtis, is the single largest shareholder, with 450.4 million shares worth $4.95 billion based on the expected $11 share price at listing.

Curtis’ father, Nick Curtis, owns 193 million shares worth $2.1 billion.

The father and son’s combined $7.1 billion holding would place them 11th on Forbes Australia’s Rich List, just behind property boss Frank Lowy and media entrepreneur Kerry Stokes.

AI demand forecast to multiply 162-fold

Early shareholders, including Wilson Asset Management and Regal Partners, insist the AI boom is still early and Firmus is well positioned to profit from booming long-term demand.

The AI company’s limited prospectus forecasts global demand for AI tokens to grow roughly 162-fold between 2025 and 2030, equal to a compound annual growth rate of 176 per cent.

The key customers expected to drive demand for access to these tokens include the world’s wealthiest technology companies such as, including Anthropic, OpenAI, Google, Amazon, Microsoft, Meta and SpaceX.

If Oliver Curtis’ $5 billion paper wealth were to five-fold to $25 billion if would take him from the prison barber at Sydney’s Silverwater jail to the top of Australia’s Rich List in little more than a decade.

Professional stock picker Fergie said he thought Firmus shares would probably trade higher for a day or two after it floats on the ASX, before early investors lead a flood of selling.

“The bull case would probably be index funds buying, but I reckon any of those investors who owned it before the IPO will be getting rid of as many shares as they can and I won’t be one of the people buying them,” he said.

“The only people really on-board with the (Firmus) hype seem to be existing investors and they’re clearly talking their own book a little and looking for a pay day.”

Frazis said he believed the majority of Australia’s professional investment community remained sceptical about Firmus’ valuation, given the lack of detail in the prospectus and highly-ambitious growth forecasts.

But he said the sheer size of the company, at around $43 billion, will also mean every large investor in Australia, including superannuation managers, will have to actively assess whether to buy shares or watch it from the sidelines.

“Aussie fund managers aren’t buying it,” he said. “The (share market performance) will likely depend on retail investors and perhaps index-aware super funds, weighed up against the massive insider selling.”

Firmus is expected to start trading on the ASX on October 27 and will be the market’s biggest listing since Telstra in 1997.