Key Takeaways
- • Australia's corporate regulator ASIC confirmed on Thursday it is probing the failed A$5 billion (US$5 billion) IPO of AI data centre operator Firmus, though it has not yet launched a formal investigation.
- • Firmus's IPO, which would have been the second-largest in Australian history, collapsed on October 9 after failing to attract sufficient investor backing amid concerns over AI valuations, heavy spending and the timing of returns.
- • The planned offering aimed to value the Nvidia-backed company at $30.6 billion, triple its valuation in a private fundraising round in August.
- • ASIC Chair Sarah Court said the regulator has engaged with joint lead managers Bank of America, JPMorgan, Morgan Stanley and Morgans, and that broker messaging during the bookbuild will form part of its inquiry.
- • ASIC set out expectations that lead managers have a reasonable basis for investor demand representations, keep bookbuild records, manage conflicts and update investors on material demand changes.
Summary
Australia's corporate regulator, the Australian Securities and Investments Commission (ASIC), said on Thursday it is examining the failed $5 billion initial public offering of AI data centre operator Firmus, according to Reuters. ASIC Chair Sarah Court told a hearing of Australian lawmakers that the regulator has not yet launched an official investigation but has engaged with the banks leading the share sale. "This was a very significant event. We understand that and we need to look at it carefully. That's what we're doing," Court said.
Firmus's planned IPO, which would have been the second-largest ever in Australia, collapsed on October 9 after failing to gain enough backing. The deal reflected mounting investor concerns over AI valuations, heavy spending and the timing of returns. The company, backed by Nvidia, had planned to raise $5 billion at a valuation of $30.6 billion, triple the value achieved in a private fundraising round in August.
The joint lead managers were Bank of America, JPMorgan, Morgan Stanley and brokerage Morgans. Bank of America, Morgan Stanley and JPMorgan declined to comment on the ASIC inquiries, and Morgans did not respond to a Reuters request for comment. Some investors have criticised as misleading a term sheet issued when the deal launched on October 1, which stated "at this fixed price indications are in excess of the offer size." A Morgans broker also emailed clients saying the order book was well above the deal size, according to local media reports. Court said broker messaging during the bookbuild would form part of the inquiry.
In a letter responding to questions from Liberal Senator Dave Sharma, dated Wednesday and seen by Reuters, Court set out ASIC's expectations of lead managers. These include having a reasonable basis for representations about investor demand, keeping appropriate records of bookbuild and allocation decisions, managing conflicts of interest, and updating investors if demand changes materially during a capital raising. ASIC declined to comment beyond the letter's contents.
The collapse added to broader negative sentiment toward AI stocks, which had driven global equity gains for much of the past two years, and raised concerns that the sector's ability to raise capital could begin to ease.
Firmus's planned IPO, which would have been the second-largest ever in Australia, collapsed on October 9 after failing to gain enough backing. The deal reflected mounting investor concerns over AI valuations, heavy spending and the timing of returns. The company, backed by Nvidia, had planned to raise $5 billion at a valuation of $30.6 billion, triple the value achieved in a private fundraising round in August.
The joint lead managers were Bank of America, JPMorgan, Morgan Stanley and brokerage Morgans. Bank of America, Morgan Stanley and JPMorgan declined to comment on the ASIC inquiries, and Morgans did not respond to a Reuters request for comment. Some investors have criticised as misleading a term sheet issued when the deal launched on October 1, which stated "at this fixed price indications are in excess of the offer size." A Morgans broker also emailed clients saying the order book was well above the deal size, according to local media reports. Court said broker messaging during the bookbuild would form part of the inquiry.
In a letter responding to questions from Liberal Senator Dave Sharma, dated Wednesday and seen by Reuters, Court set out ASIC's expectations of lead managers. These include having a reasonable basis for representations about investor demand, keeping appropriate records of bookbuild and allocation decisions, managing conflicts of interest, and updating investors if demand changes materially during a capital raising. ASIC declined to comment beyond the letter's contents.
The collapse added to broader negative sentiment toward AI stocks, which had driven global equity gains for much of the past two years, and raised concerns that the sector's ability to raise capital could begin to ease.
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