(Bloomberg) — The collapse of Firmus Grid Ltd.’s initial public offering is reverberating through Asia’s booming market for share sales, making investors far pickier about artificial intelligence infrastructure deals that hinge on future earnings.
The Nvidia-backed data center operator on Friday pulled a deal to raise as much as $5.5 billion after investors balked at its steep increase in valuation to $30 billion. The Australian company is now exploring a private round with existing investors.
Firmus’ flop is a sign of investors turning more discerning after more than a year of relentless dealmaking, driven by companies looking to raise funds for the AI buildout. IPOs, placements and block trades have raised nearly $250 billion in the Asia-Pacific region this year, adding to the 2025 tally of about $260 billion, according to data compiled by Bloomberg.
“It’s investors asking who pays for it, and at what cost of capital,” said Max Herron-Vellacott, a portfolio manager at Private Portfolio Managers in Sydney, who see the risk versus return calculus getting greater scrutiny when making investment decisions. “This raises the bar for every deal, and investors will be far less forgiving of optimistic assumptions.”
Some recent debuts have shown signs of the creeping unease. Apple Inc. supplier Luxshare Precision Industry Co. has plunged 20% and AI infrastructure firm Zhongji Innolight Co. is down about 7% since their Hong Kong debuts in July. Chinese model makers like Z.AI Co. and MiniMax Group Inc. have corrected more than 70% from their record highs.
Investors are starting to draw a hard line between companies that have a proven track record and are able to monetize, versus those that are in the earlier, more cash-hungry phase of their life cycle.
For data center operators like Firmus, the division is between operational facilities that generate immediate yield and multi-gigawatt new projects initiated by billions in debt financing, said Winston Ma, executive director of the Global Public Investment Funds Forum at NYU School of Law.
“The Firmus withdrawal is a clear signal that public markets are repricing AI infrastructure,” said Ma, who’s also a partner at Dragon Global Family Office. “In Asia, where much of the next wave of AI data-center capacity is expected to be built, this raises the bar for any IPO. Sponsors will need stronger contracted off-take, clearer visibility on energized megawatts, and more conservative leverage assumptions.”
For Firmus, of its 912 megawatt pipeline, just 46MW has been built. Investors were being asked to value the company on future earnings contingent on the data centers being successfully delivered.
The so-called neoclouds that investors are comparing many of these companies to, such as CoreWeave Inc. and Nebius Group NV, are among the most leveraged and volatile AI stocks in the US. Also, though Nscale Ltd. and SoftBank Group Corp.-backed SB Energy Inc. filed for US listings last month, they have yet to start marketing their respective deals.
While pure data center developers face more scrutiny, hardware and chip names still retain support. AI-linked companies like printed circuit-board makers and memory chip producers that are already reporting profits will see little impact, said Sumeet Singh, head of equity research at Aequitas Research Pvt. PCB maker Suzhou Dongshan Precision Manufacturing Co. on Monday started gauging demand to raise as much as $3 billion in a Hong Kong listing.
“Firmus wasn’t generating revenue and lacked a track record,” Singh said. “It’s similar to the likes of SB Energy and Nscale in the US, where the money is being raised now while the actual revenue will only start flowing through after a few years.”
Still, price has become the pressure point for investors funding new deals as higher interest rates weigh on the hefty capital requirements driving some revenue growth forecasts. Wall Street has grown increasingly anxious about AI and its potential to impact other businesses, a fear that spurred investors to dump a range of related stocks.
Growing negative sentiment and public opinion around local data center construction adds project execution risk and perhaps adjusts the discount rate applied to these lofty headline future contracted but unbuilt totals, said Hans Stege, head of investment research at PrePublic Equity Partners.
“For now, we’ve seen private markets stepping up to help bankroll buildouts,” said Stege. “And why not, given impressive traction attracting large deals from hyperscalers and labs, and support from the likes of Nvidia. But you’ve got to think the backers are expecting a public listing for this cohort at some point.”
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