Nvidia-backed AI data center company Farmus scraps planned $30bn Australian IPO

Farmus has abandoned plans for what would have been the biggest stock market listing in Australian history, citing market volatility and challenging market conditions.

The Nvidia-backed artificial intelligence data center company said an initial public offering (IPO) would not be in the best interests of the company or its shareholders.

Farmus had initially announced plans for a stock market debut that would have valued the company at more than $30bn (£22.65bn).

Farmus turns to private markets

The company said it would now seek capital from private markets while considering other options in both the public and private markets. It said it would provide shareholders with more information as those options develop.

An investment firm told the BBC that it had decided not to participate in the IPO because of concerns about Farmus’s valuation.

Farmus builds and operates liquid-cooled data centers, which it describes as “AI factories,” for customers including OpenAI and Meta.

The company operates in Australia, Singapore and other parts of the Asia-Pacific region. Its backers include Nvidia, Blackstone and Jane Street.

Blackstone declined to comment when contacted by the BBC. Nvidia and Jane Street have also been contacted for comment.

Investors question AI valuations and debt

Farmus’s decision to abandon its planned stock market listing comes as investors and industry analysts raise concerns about the hundreds of billions of dollars being invested in artificial intelligence while the outlook for long-term profits remains uncertain.

UniSuper, one of Australia’s largest pension funds, was among the institutional investors that decided not to participate in the IPO.

“We certainly think there’s a compelling story for Farmus, we just don’t have a compelling valuation,” UniSuper chief investment officer John Pearce said in an update to investors.

Pearce also said UniSuper was concerned that Farmus would need to take on more debt to fund its growth plans.

“It’s disappointing. The ASX needs a new story and this could have been a new story if it had been priced correctly,” Pearce told the BBC.

OpenAI and wider AI market face IPO uncertainty

OpenAI chief executive Sam Altman said in September that the company was not aiming to list on the stock market this year. He described a public offering as “unwise” because of concerns about the safety of the technology.

The ChatGPT maker and rival Anthropic are both aiming for blockbuster stock market debuts, with each company valued at more than $1tn.

AI stocks Nvidia and Oracle fell in US trading on Thursday after reports that OpenAI’s revenue was lower than previously thought.