Firmus hits $43.7b ASX valuation, marking Oliver Curtis’ journey from jail to AI billionaire

Convicted insider trader Oliver Curtis is set to cap his rise from a prison barber to AI billionaire in less than a decade, with his AI data centre company Firmus Technologies scheduled to list on the ASX on October 23 at a valuation of $US30 billion ($43.7 billion).

Curtis, 41, co-founded Firmus in 2019, not long after being sentenced to two years’ jail for insider trading linked to the same stock market now set to make him around $5.7 billion on paper.

The $43.7 billion valuation makes Firmus the second-largest initial public offer (IPO) in Australian stock market history, after Telstra’s $US10 billion sale in 1997.

The share market float at a $11 per share, will also be the fourth-biggest in the world this year behind SpaceX, CXMT Corp and ⁠Cerebras Systems in a deal being compared to Elon Musk’s AI-linked space business.

Firmus’ rise to a valuation larger than supermarket giants Coles or Woolworths has both dumbfounded and delighted the Australian investment community, reflecting both the scale of the AI boom and the huge sums being poured into the infrastructure needed to power it.

Among Firmus’ biggest achievements under Curtis’ stewardship are deals with US chip giant Nvidia and investment firm Blackstone.

Nvidia will sell Firmus the graphics processing units (GPUs) it needs to build its computing capacity, which Firmus will then rent to customers, including AI giants OpenAI and Meta under signed service agreements.

Splits opinion

The Firmus story is divisive, however, with some fund managers sceptical about its valuation and warning it still needs to prove it can turn its ambitious plans into operating profits and cash flow.

Currently it’s loss making, although forecasts it has provided to investors show it expects to earn about $US5 billion before interest and tax by 2028.

Ray David, senior equities analyst at Airlie Funds Management, said Firmus had an impressive short-term track record but questioned whether its valuation left enough upside for investors in its initial public offer (IPO).

“To be fair to Firmus’ management team and board they’ve positioned themselves at a time when there’s a significant shortage in compute capacity and they’ve this relationship with Nvidia that is difficult to replicate. They’ve also signed contracts with Meta and OpenAI, which is remarkable achievement,” he says.

“So, give management credit, but we’re being asked to pay a large (equity) value and we just don’t see the upside from these levels.”

David said Firmus’ total enterprise value was expected to be between $US50 billion and $US65 billion once debt of up to $US30 billion owed to lenders was taken into account.

Data centres are expensive to build because operators must fund the physical infrastructure as well as the large upfront cost of buying Nvidia’s in-demand GPUs.

This means two different data centre businesses could own two similar assets producing $100 million a year in profits. But one has amassed $20 billion in debt and the other just $US1 billion. The business with less debt is more valuable to investors.

David said it’s unclear how Firmus’ debt holders will be repaid, but they would typically rank ahead of shareholders when it came to claims on the company’s future cash flow.

The Nvidia GPUs bought by Firmus and effectively rented to its customers also have a useful economic life of about seven years, creating another challenge for investors trying to value the business.

“So debt holders sweep most of the initial cashflow from contracts (to service Firmus’ customers),” he suggests.

“So, once you pay down debt you have two or two-and-a-half years of free cashflow (from the GPUs) that will come back to shareholders.

“So equity holders have to take a view on the residual value of those chips. Our view is that once the chips have depreciated past a useful life we would expect the rental stream per megawatt (of compute power) to come down as the chips are depreciated, so our view is the starting valuation looks pretty full.”

The bigger challenge for investors, David said, was valuing the business after its existing customer contracts and GPU fleets had run their course.

“If you look at total capital to be spent it is mainly going into GPUs,” he said. “The relative size of the data centres, walls, modular racking is relatively small.”

The analyst added that investors will also need to take a leap of faith that Firmus can deliver on its construction plans across multiple countries on time and to ambitious budgets.

“Between now and then you have to build the data centres, set up the GPUs, connect the power, and then deliver service level agreements with key customers which is Meta, OpenAI, Nvidia,” David said.

“So there’s a lot of execution risk before you get to any free cashflow.”

Australian SpaceX

Aside from Curtis, hundreds of early investors are set to book massive wealth windfalls from Firmus, including former Rabbitohs rugby league star Wes Maas and billionaire investor James Packer.

Wilson Asset Management was also an early investor in Firmus, with its Portfolio Manager Tobias saying he’s confident about the company’s share market prospects.

“What the management team have done is extraordinary,” said Yao. “We’re obviously positive on the business as we think it’s in pole position to take advantage of global compute demand and it has the backing of Nvidia and Blackstone.

“Firmus also has a great, unique engineering prowess. I know the numbers are large and that makes it difficult for the market to grapple with, but compute demand with AI agents is only going up over the long term we think.”

Firmus has raised $US5 billion from equity investors in this week’s IPO auction conducted by investment bankers, who retain the right to sell another $US500 million in shares if demand is high in a deal known as a green-shoe agreement.